CRISIS IN WORLD STOCK MARKETS (Effect on Singapore's reserves)

Mr S. Chandra Das asked the Minister for Finance what is the effect if any, of the present crisis in world stock markets in New York, London, Tokyo, Sydney, Hong Kong, etc, on our reserves invested overseas.

Dr Richard Hu Tsu Tau: Sir, the Government has always maintained a conservative strategy in the management of its overseas assets. Our investments are mainly in Government bonds, with the balance divided between gold, cash, stocks and shares, and real estate.

Our stock portfolio has declined in value in line with world stock markets but as the bulk of our portfolio was purchased over a period of several years since 1982, our investments still show very substantial real gains even at present prices. The present fall in share prices should also be seen in its proper context. The worldwide bull market in stocks started in 1982 and the recent stock market declines merely bring share prices back to levels last seen in late 1986 in the United States and early 1987 in Japan.

We were also fortunate that when share prices fell, bond prices moved in the opposite direction, so that the declines in our stock portfolio were partly offset by gains in our bond portfolios. Overall, the present crisis in world stock markets has had little impact on our overseas investments.

I should also mention that our equity purchase policies have always been a conservative one. We are long term investors, concentrating on a portfolio of strong, low price/earning multiple companies with a large market capitalization, all well placed to ride through economic downturns.

Mr Chiam See Tong: Sir, can the Minister please tell us what is the percentage of the reserves that are invested in stock overseas?

Dr Richard Hu Tsu Tau: We have never announced a breakdown of our investments and I do not propose to do so now.