Singapore state-owned investment arm and sovereign wealth fund, Temasek Holdings, has lost $39.91 billion in the value of its investments between March 2008 to November 2008, due to the global economic meltdown.

The Singapore sovereign wealth fund that manages a portfolio of over $134 billion as on 31 March 2008, lost about half of its portfolio gains that it had made in the previous five years.

Fielding criticism from Singapore's members of parliament that the country's sovereign wealth fund had lost money, Singapore's finance minister Tharman Shanmugaratnam pointed out that Tamasek actually saw a net gain of $56 billion during the global economic boom from 2003 to November 2008.

He, however, admitted that between March and November 2008, the portfolio of Temasek declined by $58 billion after paying all dividends to its sole shareholder, the Singapore government and netting off all capital injections into Temasek.

Shanmugaratnam said that nearly half of the $58-billion loss was due to the 10 largest listed Singapore companies in which Temasek has a stake, losing their stock value although he was quiet on the losses accrued from the sale of its holdings in Bank of America, including Temasek's loss in investment in Merrill Lynch.

He said that the share prices of these10 companies fell by about 41 per cent on average from end-March to November.

Temasek's investments in Merrill Lynch, made in December 2007 and again in July 2008 amounted to nearly $6 billion. (See: Temasek takes a 10-per cent stake in Merrill Lynch for $900 million)

This was exchanged into Bank of America (BoA) shares in January 2009, following BoA's completion of its September 2008 offer to buy Merrill. Temasek may have lost about $4.5 billion in disinvesting its shares in BoA. (See: Temasek sells BoA stake at a loss)

Temasek's loss of $4.5 billion in BoA on an investment of nearly $6 billion is the largest loss in a single investment by any global sovereign wealth fund anywhere in the world.

Temasek has substantial stakes in the world's largest rig-builder, Keppel Corp, Singapore's flagship airline, Singapore Airlines, Singapore Telecommunications as well as CapitaLand, the property developer, among others.

Having come under fire from the country's lawmakers over losses in Temasek, Shanmugaratnam did admit that compared to the Government of Singapore Investment Corp., which invests Singapore's foreign-exchange reserves and yield better returns, Temasek had made riskier investments in 2007-2008.

He, however, defended Temasek's investments saying it had performed better than many other large investors over this six-year market cycle and that it was not realistic to expect it to outperform in every cycle.

He also added that it was also not realistic to expect Temasek to avoid losses on every individual investment, or losses on its overall portfolio when the global market was going through an upheaval.

He said that Temasek had made a respectable 15 per cent return on investment compared to the 6 per cent annualised gain in global equity market indices.

Analysts say that the 15-per cent return on investment was fairly good for the wealth fund  - among the world's 10 biggest sovereign wealth funds -and even the $53.7 billion Harvard Endowment Fund had yielded returns of 17.6 per cent over the five years ended June 2008.

Ho Ching, the wife of Singapore's Prime Minister Lee Hsien Loong, who was the CEO of Teamsek Holding and had resigned in February this year, (See: Temasek CEO to quit) had aggressively invested overseas, gradully moving the fund first to Asia and later the OECD countries and, in the recent past, to China, the US and Europe. 

Her silent but aggressive business strategies in the last six years has yielded immense value for Temasek as it saw its portfolio value surging from approximately $60 billion in 2003 to over $134 billion as on 31 March 2008.

During her tenure, Temasek ventured into China and invested in two large state-owned banks, China Construction Bank and Bank of China and the privately owned Mingsheng Bank.

Temasek had made a wide array of investments last year, which includes a $2 billion investment in Barclays in July while it has been steadily increasing its stake in Standard Chartered over the past two years. Temasek is reported to own 19.03 per cent of Standard Chartered valued $8.4 billion.

It also has investments in Thailand, Indonesia and India. The company has set up the $100-million Merlion India Fund to investment in mid-to late stage Indian companies and it had invested in ICICI Bank and Tata Consultancy Services apart from buying equity in Tata Teleservices, Bharti Infratel and Punj Lloyd.