While looking through Creative Technology’s latest Annual Report, I was surprised to see “Holland-Bukit Panjang Town Council” listed as one of the majority shareholders with 530,000 shares currently valued at about S$3,000,000.
While I understand that town councils would want to invest their funds to get some capital gains on their surpluses, I wonder if there are any policies to guide their investments. Should town councils be allowed to invest their funds in high-risk equities? Who approves the investments? And, why would the Holland-Bukit Panjang Town Council invest in Creative Technology, a company that has been losing value on the stock market for years? If the town council had already owned the shares since long ago, they should have sold their holdings to prevent further losses. If they had just bought in not long ago, the question would be about how wise the decision to buy was, or whose idea/advice was it for the town council to throw their money into this counter.
I would think town councils should put their money in lower risk investments such as fixed deposits or funds with track records of stable performance… at the end of the day, town councils should not see investments as a primary source of income – after all, the funds come from taxpayers and should rightfully be used for improvements to facilities rather than as capital for investments.
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I think this warrants some answers from the Town Councils immediately.What is the mark-to-market now from the time of this investment?
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I don’t know when they bought into the shares, but everyone knows that Creative has been losing market value for the longest time… so whether they have just bought in or had already been in for a while, it is almost certain that they are losing money.
Imagine if they had bought in when the stock was trading at about $10, now its just about $6, that would be a huge loss, an amount that many normal Singaporeans would never be able to make in a lifetime.
Could this be another way to move “cheap fund” from the government to Creative?
Now I know why PAP Town Councils need so much money.
In good times, if the stocks earn, will it go back to the residents in the form of subsidies ?? Who benefits ??
In bad times, who will foot the bill for the debt ?? The money need to come from somewhere right ?
I feel Town Councils should not go to such risks unless for a good reason. It is a form of gambling.
It should just stick to just proper fund management. The money is after all from residents who pay for services provided by Town Councils.
http://theonlinecitizen.com/2007/10/02/uniquely-singapore-f1-or-f9-%e2%80%9cresidents-willing-to-pay-more-for-service-and-conservancy%e2%80%9d/
A web of connections similar to NKF maybe ??
The Town Council Act, read today with Section 33A of the Interpretation Act, gives town councils the power to invest their funds in a manner that they deem fit, in line with powers that are given to other statutory body.
well, those MPs who advocate CPF money can be invested in trustee stocks are still in parliament! we are still holding the babies, while they are on their way to be seating board seats and qualify for COE as president
GIC can do so why not Town council? Ha Ha!
You may find this report interesting, especially the part on using sinking fund to invest:
http://www.sembawangtc.org.sg/annual%20report/2004-2005-page16-20.pdf
I think it is ok as long as there is a formal risk mgt policy and good risk mgt practice in place.
I do not wish TC to hide money underneath their pillow cases.
As for MTM, you can always check the SGX for that share price.
[...] to the blog post made in mrbiao.com, the writer found that Holland-Bukit Panjang Town Council was listed as one of the majority [...]