Why GIC cashed out in mid 2007?

• lionnoisy

  1 Feb 08, 17:30

  1.Why did GIC cash out billions of assets in 2Q and 3Q in 2007?What signals did they see,while other could not see or ignore the signals?

  2.I think the sharp fall of Countrywide Financial stock from Feb was one of the signal.The stock dropped a lot one day in March.

  Besides,the accounts of the co.,like other subprime,co,full of assumptions,eg in

  Countrywide Financial Corporation
  Consolidated Statements of Cash Flows
  (Dollar amounts in thousands)

  Changes in MSR value due to realization of expected cash flows fro mortgage servicing rights

  Assumptions 2.4 billions in 2007.!!

  

  

  Countrywide stock prices

  http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CFC

  The co.is really no1.Nobody stand up AND ask why its stock dropped a lot from Feb.Only GIC??

  http://about.countrywide.com/About/About.aspx

  Leadership: Countrywide is America's #1 home loan lender.* In fact, we're a leader in nearly every aspect of real estate finance. We offer our customers a level of expertise, product selection, and service that's unmatched in the industry.

  Diversity: Countrywide is America's #1 Lender to Minorities.** We are commited to the Hispanic, Asian, and African American markets and we continue to build a diverse workforce and management team.

  Performance: Countrywide has been one of the best performing financial services companies in the past 25 years and is ranked #91 in the Fortune 500.END

  3.http://www.bankingandfinance.com.sg/ttd_bizenterprise/Singlenews.aspx?DirID=35&rec_code=129853

  28 January 08  The Business Times   by Anna Teo in Davos, Switzerland   Timely divestments enabled GIC to buy into UBS, Citi

  BACK in the third quarter of 2007, when global financial markets were still b uoyant and the investor mood fairly exuberant, the Government of Singapore Inves tment Corporation (GIC) pulled back: it sold some of its equity holdings. As a r esult, when the opportunities to invest in UBS and Citigroup arose, it had the cash in hand to do so - some US$16 billion. Speaking to Singapore reporters in Davos o n Saturday, after a few days of discussions on sovereign wealth funds at the Wor ld Economic Forum, GIC deputy chairman and executive director Tony Tan said one question tha t came up during interviews he had with foreign journalists here was - where did GIC get the resources for its recent huge investments? Explaining how an d why GIC had the means, he said: 'We have been very worried about the financial markets for m any months. We thought that the level of leverage in the US market was excessive , risk was not being priced correctly, asset prices were going up at a rate whic h was not sustainable. These worries have been growing over the years. 'And in the second quarter last year, looking at all of these developments, we took a fundam ental review of the GIC portfolio. Until then, GIC had been fully invested in th e markets - they had served us very well, giving us very good returns, but we felt that unde r these circumstances, we should move towards a more conservative portfolio and convert part of our equity holdings into cash, which is something we have not do ne for many years.' GIC did just that in Q3 2007, 'in order to raise cash, because we were very worried about the outlook for the economies and the financial markets '. At that point, the markets were still doing well - 'there had been mod est falls, but they were still strong', Dr Tan noted. Of course, 'everything fell apart' by Q4. And by then, GIC had raised a 'considerable amount of liquid resources', he said. 'So when the invitation from UBS and Citigroup came to invest in t heir equity, we had the resources which were available without having to take emergency measu res to raise cash. A lot of money, but it's well within the risk limits which we had prescribed for the finance sector.' As it turned out, GIC's reading of the market direction proved right, Dr Tan said. 'What surprised us was the fact that when the markets actually turned, they did so at such a speed and the contagion effect was so broad that they affected even the best known and well regarded ba nks like UBS, Citigroup and Morgan Stanley.' But he reiterated that the recent 'conflue nce of events' that hit banks in the US and Europe, and which led to GIC's UBS a nd Citigroup ventures - the US sub-prime crisis, recession fears, credit tighten ing - were highly unusual circumstances. 'We will not do this on a regular basis,' D r Tan said. While GIC is 'always on the lookout for opportunities', he hopes 'th ere won't be another confluence of events which will give us this opportunity ag ain', he added. 'I think if there is another such confluence of events which will make su ch opportunities available, then the world is in real trouble.'

   

  4.Pl share with us the 2 Federal 100% mortgage co how to helped US people to buy houses!

  5.Countrywide as at Dec 2007

  Delinquency as a percentage of:

  unpaid principal balance   ---7.2%

  Foreclosures Pending as a percentage of:
  unpaid principal balance--1.44%

  is it typical for US?