Asset owner news roundup, Aug 28
AUSTRALIA
The asset allocation of Australian superannuation funds is heavily geared towards risk assets, with 45% of portfolios invested in equities, according to a UBS Asset Management report.
Bond allocations attract 26% of assets, the report noted, which is the lowest among the nations analysed in the report – Australia, Denmark, Japan, Netherlands, Switzerland, the UK and the US.
Source: Financial Standard
The National Australian Bank (NAB) was accused of having a disregard for regulators and the law for charging members fees for no service, among other regulatory breaches, in the closing submissions by the counsel assisting Australia’s Royal Commission on August 24. Other superannuation trustees, such as Commonwealth Bank, IOOF, and AMP were also singled out in the 223-page report for being in violation of superannuation laws.
National regulators the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority were criticised by the counsel as well for failure to implement and enforce adequate industry regulation in light of the counsel’s findings.
Source: The Royal Commission
CHINA
HSBC plans to set up an insurance office in the southern Chinese city of Shenzhen in October as it eyes a potential market of 27 million people in China’s planned “Greater Bay Area” economic region, which integrates Hong Kong and other southern mainland cities into one economic and business hub.
Bryce Johns, group of head of insurance for HSBC said the target clients would be high-net-worth Chinese and expatriates working and living in the Greater Bay Area, the Yangtze River Delta and Beijing. The insurance venture would cross-sell services to small and medium-sized corporate clients of HSBC and Hang Seng Bank.
Source: SCMP
JAPAN
The Government Pension Investment Fund (GPIF) has more than doubled its ownership of foreign shares since 2014, and is now a top 10 shareholder in more than 260 companies outside of Japan, according to a Bloomberg analysis of the fund’s positions.
GPIF’s exposures are particularly pronounced in the US, which accounts for 55.5% of its offshore stock positions. This means it is very reliant on the country continuing to enjoy a bullish stock market. Of its $348 billion in foreign equities, GPIF had about $193 billion in US stocks. The pension fund has 86% of its offshore share exposures through passive sources.
Source: Bloomberg
KOREA
National Pension Service (NPS) completed the formal acquisition and leaseback of Goldman Sachs’s new London headquarters for £1.2 billion ($1.54 billion). The acquisition of the 826,000 square foot (77,000 square metre) building in the UK capital’s financial district marks the latest effort by Korean investors to buy into real estate in the country.
In the first half of 2018, Korean investors poured £1.1 billion into the UK property market. NPS’s acquisition is the largest for a UK office building this year, and is the third-largest on record. Scott Kim, head of global real estate at NPS, said the building, which Goldman Sachs will move into in mid-2019, is a “high quality asset which is well-aligned with our defensive strategy”.
Source: Financial Times
Life insurers in South Korea saw their net income rise by 6.78% year-on-year over the first six months of 2018 to W3.15 trillion ($2.81 billion), as the companies benefited from selling securities, according to the Financial Supervisory Service.
The total net income of both domestic and foreign insurers operating in the country rose, in particular on the back of strong investment income, which was up 11.7% year-on-year to W12.99 trillion as a result of “gains on disposition of marketable securities”. However, losses from insurance income rose 14.9% to W2.56 trillion, as the fees on variable life insurance products such as retirement pensions and protection-type insurance increased.
Source: Financial Supervisory Service
While overall income was up, Korea’s life insurance companies operating revenue fell by 5.08% on average over the first half of the year, as the companies prepare for International Financial Reporting Standards 17, a new global insurance accounting standard to be adopted by the country in 2021.
Insurers are preparing for the shift by overhauling their management strategy and enhance capital requirements. This includes measuring liabilities by market value, which is forcing insurers to accumulate more funds than before as capital.
Insurers have also stopped offering savings-type insurance, despite these products offering them a big premium, because the new rules calculates these products fully as liabilities. The Korea Insurance Research Institute estimates insurers’ premium income from savings insurance will drop 13.3% this year, while income from non-savings insurance will rise just 1.4%.
Source: Korea Times
MALAYSIA
Malaysian sovereign wealth fund Khazanah was reported to be in talks to sell its 60% stake in property developer M+S Pte Ltd to its joint-venture partner and Singapore state investor Temasek.
However, another report rebutted those claims, saying such talks had not taken place. M+S was established in 2011 to develop land in Singapore and Malaysia following an agreement between the two nations.
Sources: Free Malaysia Today; The Malaysian Insight
SINGAPORE
Singaporean sovereign fund GIC has acquired a 49% stake in Indian property developer Provenance Land, according to media reports. Financial details of the transaction were not disclosed.
The transaction is the first investment by GIC into a firm that is involved in developing mixed-use property projects in India.
Funds from the stake sale will be used to develop a luxury project, consisting of a five-star hotel, luxury residences, and an office tower in Mumbai.
Source: Livemint
INTERNATIONAL (EX-ASIA PACIFIC INSTITUTIONS)
International institutional investors, including big sovereign wealth and pension funds, are eyeing the upcoming Indian real estate investment trust (Reit) market, said Peter Verwer, chief executive of the Asia Pacific Real Estate Association.
The country's first Reit listing is expected in the next few weeks from US private equity giant Blackstone Group and Indian property developer Embassy Group.
Local institutional investors are also signalling their interest by changing their mandates to allow allocations to Reits and infrastructure investment trusts, said Verwer.
Source: Economic Times (India)
Warren Buffett’s Berkshire Hathaway conglomerate is set to buy a small stake in One97 Communications, making it the billionaire investor’s first investment in an Indian company, according to two people aware of the development.
One97 is the parent of Paytm, India’s largest payment services provider, which has been in talks with Berkshire Hathaway since early February to raise about $300 million to $350 million on a valuation of about $10 billion to $12 billion, the two sources said on condition of anonymity.
Source: Livemint
Other asset news reported in AsianInvestor:
China Life eyes more real estate in alts push
Why CPPIB and Goodman are upping China logistics bet
AIA eyes move into infra loans, Belt & Road assets
Cathay Life lifts overseas exposure, bumps up yield