With the hindsight of 11 September, this is the mistake that the men running Singapore Inc. fell into. This was the year that SingTel and DBS Bank made up for their earlier failures to make major strategic acquisitions overseas. The stock markets had pulled back from recent highs but things were not that bad. The major economies were slowing but were not likely to fall into recession. Valuations had fallen and it was time to pick up bargains.

So off went SingTel and DBS Bank to do their masters' bidding.

SingTel's nine billion dollar purchase of Optus in Australia is well known to AsiaWise readers, so nothing further need be said about it post 11 September, (except that Singaporean journalists will no longer be able to say that SingTel's loss of Hongkong Telecom to PCCW showed its disciplined approach to acquisitions). Nor will they be able say that BG Lee (SingTel's CEO) has had the better of Richard Li.

Then there is India. So far in the last two years, SingTel has committed a total of US$1.3 billion on various ventures with Bharti. In June this year, HSBC Investment Bank calculated that SingTel needed to spend another US$1.7 billion to help Bharti become a major telecoms player in India. Now market conditions mean that Bharti's plans to raise US$200 million in fresh equity will have to be delayed indefinitely. This might mean that SingTel might have to step in with some help as investors avoid telcos and South Asia.

And Indonesia. On 12 September, Reuters reported, quoting an Indonesian source, that KPN, the highly indebted Dutch telco, would sell SingTel its 22.3 percent stake in PT Telkommunikasi Selular for US$600 million. The Indonesian government through Telekom Indonesia holds the balance. This values the company at US$2.7 billion or US$1200 a subscriber -- reasonable pre-11 September. KPN said talks were ongoing and SingTel refused to comment. It had in early September denied that any agreement had been concluded when there were stories of a higher price being paid.

And DBS's US$6 billion takeover of Hong Kong-based Dao Heng Bank is getting more difficult to justify. To recap, it bought Dao Heng at 3.2x financial year 2001 prospective book value at a time when Dao Heng was trading at about 2 x historical, and most of its rivals were trading below 1x book value.

DBS and its apologists in the media and the broking industry explained that the purchase was strategic, and that, anyway, Dao Heng had a good earnings track record. On 17 September, Dao Heng Bank reported that its year-to-June net profit fell 4.6 percent from the previous year due to the competitive operating environment, with loans seeing only mild growth and with interest margins narrowing. The market had expected a rise in profits.

Things can only get worst for DBS in Hong Kong.

SIA has narrowly escaped a dishonorable mention because the New Zealand government was dilatory in approving an increase in its stake in Air New Zealand. SIA might have been the controlling shareholder when 100 percent owned subsidiary Ansett failed, having paid NZ$1.31 a share. The shares were suspended at NZ$0.40 a share (having traded as low as NZ$0.15.5) and it is uncertain whether SIA will withdraw its latest offer.

Maybe the men running Singapore Inc. should advertise for foreign talent in the field of astrology or other predictive arts. Their track record can't be much worse than the investment banking and managerial talent coming in from the West to date.

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