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18 July 2009

Singapore’s central bank reports first loss

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The Monetary Authority of Singapore posted its first loss ever as the global financial crisis eroded the value of its investments, reported Bloomberg news.

The central bank had a net loss of S$9.2 billion ($6.3 billion) in the year ended March 31, according to an annual report released yesterday, the equivalent of about 3.5 percent of the authority’s total assets on average. The bank posted profits of S$1.22 billion to S$7.44 billion in each of the previous five years, the report showed.

“The unprecedented global financial crisis had a severe impact on financial markets worldwide and many asset classes suffered steep declines, which affected the valuation of the Authority’s foreign assets,” it said in the report.

The MSCI World Index has fallen 28 percent in the past 12 months and slumped 42 percent in 2008 as the world economy slipped into its deepest recession since the Great Depression. A recovery in financial markets since March has helped

Singapore’s central bank recovered more than half of its losses, Managing Director Heng Swee Keat said yesterday.

Hong Kong’s Exchange Fund Investment Ltd., used to defend the city’s currency peg to the U.S. dollar, recouped its first- quarter investment loss in the middle of May as financial markets recovered, Hong Kong Monetary Authority Chief Executive Jospeh Yam said in May.

The fund had lost HK$33.5 billion ($4.3 billion) in the three months ended March 31, its biggest first-quarter loss since at least 2001. A decline in the value of equities contributed 62 percent to the fund’s loss in the first three months of 2009, according to Bloomberg calculations based on a slideshow presentation Yam used.

The Government of Singapore Investment Corp.’s assets have fallen about 25 percent from their peak last year, the Straits Times reported in March, citing Minister Mentor Lee Kuan Yew. Temasek Holdings Pte, the island’s state-owned investment company, had a $58 billion decline in its overall portfolio in the eight months ended November, Finance Minister Tharman Shanmugaratnam said in May.

The central bank’s “investments were negatively affected by the crisis,” Heng said. “This severe crisis has therefore pared back about 80 percent of the gains in the preceding two years. The extent of loss has been mitigated as we raised the liquidity profile of our portfolio in the early part of 2008, in the face of greater uncertainties.”


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