CRITICAL SPECTATOR, HO CHING SILENT ON MAS $30.8B LOSS GOES UN-NOTICED BY IB FOLLOWERS

To za tobą, Michael (it’s behind you). MAS' losS of $30.8b is an internationally explosive news item but it does not catch Critical Spectator’s attention. Or is it because it has no propaganda value for PAP?

Is there a reason to wait till Jul 3 to discuss Ridoutgate in Parliament at about same time 2 days later that MAS released its 22/23 annual report? Just a coincidence? Singaporeans are consumed by distraction of soap operas to bother about serious economics stuff. CS wrote several articles that hit hard at opposition figures and anyone who raised questions against the conduct of the two ministers who took up residence at the government-owned bungalows.

Our resident Polish blogger Critical Spectator never misses each and every opportunity of positive news to churn out a fawning blog that pleases officialdom. The cheer leader feeds his adoring unquestioning Facebook followers as Ho Ching shares his post. Don’t get me wrong. Of course I am glad when the government does the right things. What I would like to see is balanced commentary, including times when mistakes were made, or policies that achieved negative results.

I am not on a Schadenfreude trip to gloat over this colossal loss. As a matter of fact, I fully recognise the loss is an unavoidable cost of pursuing a monetary policy to manage non-inflationary growth. It is not mismanagement and does not reflect on MAS’ performance.

Hey CS, did Singapore grew richer by S$42.1b?

Perhaps CS failed to observe this in MAS 22/23 financial statements. During the year, MAS made additional purchases of S$42.1b of foreign currencies which lifted OFR level to a high S$597.8b. Why didn’ CS boast again how Singapore has grown richer by S$42.1b. Remember his headline on 14 Jul 2021:

“S’pore is richer by over S$200B thanks to COVID-19, as Temasek announces record returns”

CS was referring to increases in Temasek’s investment portfolio and MAS’ OFR (official foreign reserves) which grew by S$160b in 20/21. Retired investment banker Chris Kuan was first to point out an increase in the asset side has a corresponding increase in liability side. For that, Chris was lambasted by CS. I ventured into the lion’s den and engaged CS in his FB page. Basically I expended Chris’ point, that OFR is funded by debt therefore there is a cost, that increase in OFR does not reflect increase in wealth, We all understand wealth increases if there is undistributed net profits and shareholder value has improved, not simply by looking at an increase in any specific asset item. I was lambasted by a colony of IBs who refused to hear contrarian views nor a willingness to learn.

In response, I blogged to explain in “Again, did Singapore grow richer by S$235b during the pandemic? - (26 Jul 2021).

Will CS post GIC increase wealth by more than S$162.7b?

This is jumping the gun since GIC annual report is not out yet, but let me explain. I prophesied somewhere (FB?) sometime back that, bearing disastrous asset depreciation, GIC is on it’s way to climb several rungs up the list of world’s top sovereign wealth funds after MAS makes its forecasted transfer of S$185b Official Foreign Reserves to the government. In 22/23 MAS transferred out S$162.7b.

CS in the past had been chest-thumping on behalf of Singapore government on how GIC and Temasek have been super fund managers increasing wealth by referencing only portfolio size increases. I had mentioned an increase in portfolio size from valuation and internal funds are great. But if its from capital injection, something he failed to take into consideration, then any idiot can increase portfolio size.

So I’m wondering, with this transfer of S$162.7b OFR, will CS go ra-ra again and say look, a massive portfolio growth, see how GIC increased wealth.

Couple of points affirmed by MAS Managing Director:

There were several points which I had tried unsuccessfully to share in the lion’s den and which have now been affirmed by Ravi Menon in his presser. I hope CS had paid attention and recall how we crossed swords.

1. Both Chris and I had explained there is a liability side to the huge OFR since all forex intervention to purchase foreign currencies are sterilised. That means debts are created in the form of MAS bills and reverse repos. There is a carry cost for these foreign asset.

And here we are, in 22/23, due to increased transactions and SORA (interest rate) MAS was hit with an interest expense of S$9b. Menon affirmed this is attributed to borrowings to absorb the liquidity caused by selling SGD to purchase foreign currencies.

2. CS repeatedly explained Singapore is the glittering city on the hill that all foreign elites are so enamoured they funneled their money here. All these money flow chasing SGD is causing the upward pressure on the exchange rate. I had countered wealth may seem to have flowed in like crazy but they are not necessarily onshore. It does not mean elites bring in their wealth and convert to SGD. Say a PRC Chinese, fearful of CCP capital controls, moves his huge USD deposits to Singapore. It does not mean he is converting to SGD. He merely deposits USD with a local bank. The funds remain offshore.

Menon has affirmed the wealth flows do not mean money came into Singapore. Their wealth remains offshore. According to Menon, of property transactions, only 4% were from foreign funds.

(Just so you know, the bearded guy in the featured image is not CS)

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