The CPF “blackhole” and why you won’t know how GIC and Temasek are investing


It is no secret your bank invests the money you deposit. This is the same with your CPF money. Unlike the bank however, the Government Investment Corporation and Temasek Holdings manages these funds in a variety of investments.

Unfortunately, they do not disclose the status of these investments. Now although CPF guarantees you between 1%-4% interest on your deposits and zero risk to your money, some people are still keen to know how their money is being invested. Yet GIC and Temasek Holdings will not do so.

There is no conspiracy here and their behaviour is nothing out of the ordinary. Here’s why:

1.) For practical reasons

Sovereign funds don’t just invest in public instruments such as commodities and stocks. They also have investments into lands, mines, properties, industries, wool…just about anything really. Most are instruments not even on an exchange. The length of their holdings can range from months to even 20, 30 years into the future, it is not practical and near impossible to predict the outcome of these investments.

2.) For competitive reasons

If both you and your competition hold several billion dollars and hot on each others neck, you don’t want to disclose your position.

Let’s say hypothetically GIC will be buying into shares of an Australian mine. If a competitor knows of the move, the smart thing to do is to buy ahead of GIC and sell the very same shares to them at an inflated price – which will turn out to be very stupid for GIC.

You also don’t want others to piggyback off your decisions. Sovereign funds have invested millions into employing the best analysts they can get, why would you want to give away free information to the world?

3.) They cannot disrupt international markets

GIC and Temasek are different from retail funds. The size of their financial movements are measured in billions.  Maybe even trillions, we don’t know. If you declare the types of investments you make, you send messages to the market and cause it to move in unnatural ways. After all, investments can be steered by perception and mood.

You also don’t want to alarm the international community by looking like you’re trying to secure control of important industries for political rather than financial gain.

4.) It may affect their ability to exit investments

Once others figure out your investment strategies and your purchase prices, good luck trying to exit. The investment world is shrouded in secrecy and the reason for it is really just business. It is cold hard cash, nothing more.

5.) They need to defend against heavyweight short-sellers from attacking our economy

A short-sell is an investment move where you sell (at high price) first and buy (at low price) later.

In 1992, George Soros did exactly this. He shorted US$10b worth of British Pounds, giving him a profit of $1b – this resulted in the UK’s being forced to pull out from the European Exchange Rate Mechanism.  He was accused of similar attacks on ASEAN in 1997.

In 2012, Muddy Waters LLC launched what could be seen as a public relations attack on Singapore and US listed Olam International. Merely by criticising Olam’s accounting practices, it wiped out almost 50% of Olam’s value.

These attacks are not for fun or personal vendetta. These are merely moves that make the aggressor a good amount of money.


The Government Investment Company and Temasek Holdings are not the only sovereign wealth funds to withhold information about their investments. Inadequate transparency is a concern to all other sovereign wealth funds in the world. The Qatar Investment Authority, the China Investment Corporation – they all face the same issues.

So take it easy – your CPF money is safe. The recent calls by NTUC to increase CPF contributions by employers is not a conspiracy to get more money from you.

And… it would be very helpful if a government representative could come forward to explain these risks to the public, instead of merely brushing aside all criticisms. This is the age of open communications, I urge civil servants and politicians to step forward in presenting and clarifying these things clearly.







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