TEMASEK'S exit from Bank of America ('Temasek sells BoA stake', last Saturday) is bewildering although some probable reasons for it were suggested by money editor Ignatius Low in a commentary on the same day, 'Temasek should clear the air'.
One reason was that Temasek did not end up with what it paid for. Its investment in Merrill Lynch ended up with BoA after the two entities merged.
It is difficult to understand why a long-term investor like Temasek was willing to stick with a dud like Australia's ABC Learning centres to the end, but did not try to exercise a little bit more patience with a US government-backed entity like BoA.
Has the board of Temasek been given an objective assessment of the financial situation in the United States?
Was it that difficult to conclude from the various news sources that BoA would not be nationalised?
Was nationalisation a push factor for the board to dump BoA?
The US government has stated clearly that it will not nationalise BoA even though it is technically the largest shareholder of the bank.
What more assurance does the board need?
I agree with Mr Low when he wrote that 'these are, after all, extraordinary times, and so extraordinary outcomes - and losses - will be expected'.
But, the untimely foray into Merrill Lynch and the ill-timed exit from BoA were not that extraordinary in nature.
The performance benchmark for Temasek and the Government of Singapore Investment Corporation has been raised to the highest level by the Government because, we were told, it had put in place extraordinary men to safeguard our reserves.
Thus far, the investment decisions regarding Merrill Lynch and BoA have been ordinary and incomprehensible.
