FINANCE Minister Tharman Shanmugaratnam defended Temasek Holdings' overall track record on Thursday, saying that it made 'large investment gains' during a six-year cycle from 2003, which saw both boom and bust times.

Mr Tharman told Parliament that Temasek's portfolio grew $56 billion from March 2003 to November 2008, even after taking its recent sharp decline into account, averaging a return of just over 15 per cent a year during that period. He disclosed this when responding to questions on Temasek's sale of its Bank of America shares from Ang Mo Kio GRC MP Inderjit Singh and Non-Constituency MP Sylvia Lim.

Long-term investor, but not locked in forever FINANCE Minister Tharman Shanmugaratnam has explained Temasek Holdings' recent sale of its Bank of America (BoA) stake which resulted in estimated losses of US$2.3 billion (S$3.3 billion) to US$4.6 billion. He told Parliament a long-term investor is not 'locked in' regardless of major changes or new investment propositions. Temasek originally bought Merrill Lynch shares. When BoA bought Merrill, its shares were converted to BoA's. That changed the investment as a proposition, he said. ... more RELATED LINKS  SPEECH BY MR THARMAN SHANMUGARATNAM, MINISTER FOR FINANCE

In February, Parliament was told that Temasek's net portfolio value dropped $58 billion - from $185 billion to $127 billion - between end March and November last year, a fall of 31 per cent.

On Thursday, Mr Tharman said the 'only reasonable way' of evaluating Temasek's performance is 'to look at how the losses and gains add up, and how its overall portfolio performs over time'.

He said: 'Temasek has in fact made large investment gains over the course of the market cycle that began in 2003, including the boom that lasted till 2007 as well as the subsequent bust.'

The minister said Temasek's $58 billion fall in value came after a 'much greater gain' of $114 billion over the preceding five years. 'Even after taking into account the recent sharp decline, Temasek's portfolio had still grown by $56 billion over the course of the cycle,' he told the House.

Mr Tharman explained that a 'large part' - about $32 billion - was due to the slump in the market value of the 10 largest listed Temasek-linked companies here, pointing out that the share prices of these companies had retreated about 41 per cent between March and November last year, in line with the general movement of the Singapore market.

Temasek's performance as of last November also takes into account 'all unrealised losses including mark-to-market losses on the Merrill investment,' he said.

Mr Tharman said Temasek has performed 'respectably' compared to relevant market indexes and other reputable institutional investors.

'Temasek has achieved total shareholder returns by market value of slightly over 15 per cent per year on average (in US dollar terms) over the cycle. This compares with a 6 per cent annualised gain in the global equity market indices (MSCI World).'

Read the full report in Friday's edition of The Straits Times.