Insto roundup: Aussie supers’ anti-green votes; Pressure on Calpers CIO over China
AUSTRALIA
Shareholder activist group Australasian Centre for Corporate Responsibility (ACCR) called out Australia’s largest superannuation funds for failing to step up on climate action, and they also came under fire for investments in fossil fuel companies.
Its new report compared the publicly available proxy voting records of 50 of the largest super funds in Australia, looking at 135 climate change-related shareholder proposals (26 being in Australia). In 2019, overall support for Australian shareholder proposals declined from an average of 19% in 2018 to 14.8%, which was consistent with the trend in the US (32.5% in 2018, down to 25.1% in 2019).
CHINA
The Ministry of Finance (MOF) will transfer 10% of its equity interest in China Life Insurance (Group) Company, parent of China Life Insurance, to the National Council for Social Security Fund to supplement the public retirement fund.
Upon completion of the transfer, the MOF and NCSSF will hold 90% and 10% equity interest in China Life Insurance (Group) Company, respectively, which in turn holds 68.37% equity interest in its subsidiary China Life Insurance.
Source: HKEx filing
China Life Insurance (Group) Company, the parent company of the nation’s largest life insurer, is planning a backdoor listing of its key businesses in Hong Kong as early as this year.
The Beijing-based conglomerate, which spans property and casualty insurance, banking and asset management, plans to inject its main assets into the listed China Life Insurance, which will in turn issue new shares to the parent.
The move would also enable China Life Insurance (Group) Company to widen its access to capital markets without going through the more complicated and lengthy process of a separate initial public offering.
Source: Bloomberg
INDIA
Life Insurance Corporation of India (LIC) invested Rs468.5 billion ($6.67 billion) in equities in the first 10 months of the financial year of 2020, down 20.75% from the amount invested in the same period last fiscal year, according to official data. The state-owned insurer had invested Rs591.16 billion from April 2018 to January last year.
According to LIC, its profit in the first 10 months from investments in equities rose 42.36% to Rs232.73 billion, from Rs163.49 billion a year ago. During the same period, domestic institutional investors including insurance firms, had invested Rs 568.27 billion in the stock markets.
Source: Live Mint
KOREA
South Korea's state retirement fund last year posted the highest return rate in 10 years due mainly to bullish stock markets at home and abroad.
The National Pension Service said it registered a preliminary return rate of 11% last year, earning approximately W70 trillion ($59 billion). It was a sharp turnaround from a negative return of 0.92% for 2018, and the largest yield since 2010.
Source: Yonhap News Agency
Hana Financial Group said February 14 it had inked a sales and purchase agreement with the Korea Teachers’ Credit Union to buy a 70% stake in The-K Non-Life Insurance for W77 billion ($65.1 million).
The-K Non-Life will become the 14th affiliate and second insurer arm to be under Hana’s umbrella. KTCU will remain a minority shareholder of the insurer with a 30% ownership.
Source: The Korea Herald
South Korean institutional investors will continue to increase their offshore allocations amid persistently low domestic interest rates and demographic trends, said research published Monday (February 17) by Natixis Investment Managers.
Given the $1.4 trillion in combined assets of Korea’s National Pension Service ($612 billion) and its life insurers ($776 billion), these investors play a similarly big role in influencing global asset prices to that of Japan’s huge Government Pension Investment Fund, added the report. And that’s before adding the assets under management of Korea Investment Corporation or private pensions.
Source: Natixis
Major non-life insurance firms in South Korea saw their combined net profit fall 39.5% last year due to increased losses from their automobile and health insurance segments, industry data showed January 16.
The top eight non-life insurance firms operating in the country reported a combined net profit of W1.75 trillion ($1.4 billion) in 2019, compared with a profit of W2.7 trillion a year earlier, according to their financial reports.
Source: Yonhap News Agency
MALAYSIA
The chances of the Employee Provident Fund (EPF) paying a 6% dividend to its 14.5 million plus members are slim. In order to do that, the Malaysian state pension fund will have to achieve the highest quarterly investment performance in at least 20 quarters.
The challenge stems from the EPF’s growing fund size, which is set to reach RM1 trillion ($240 billion) by next year. Accumulated contributions from members stood at RM864.7 billion as at end-October 2019 versus RM344.6 billion at end-2008, data from Bank Negara Malaysia showed.
The amount to pay 1% of EPF dividend had more than doubled from RM3.73 billion ($900 million) in 2010 to RM7.7 billion ($1.86 billion) in 2018.
Source: The Edge
SINGAPORE
Singaporean sovereign wealth fund GIC has invested an undisclosed amount in Sunset Park’s Industry City in Brooklyn, New York, valuing the site at $1.3 billion. The stake was bought from investment firm Angelo Gordon.
The deal came as a redevelopment plan of the industrial park is slated to be approved by the City Planning Commission. The park’s other owners, including Belvedere Capital Real Estate Partners and Jamestown LP, have been fending off local opposition to rezoning plans that would allow them to build three new buildings, a school and more retail space.
Source: The Real Deal
GIC has acquired the LG Twin Towers in Beijing for Rmb8 billion ($1.15 billion), the capital’s biggest office acquisition since early last year.
LG put the grade-A building up for sale in August last year; it is located in Beijing’s Guomao central business district.
“GIC has been investing in China for more than two decades,” said Lee Kok Sun, GIC Real Estate’s chief investment officer, “China remains a key focus for us, and this investment reflects our continued commitment to identifying attractive opportunities in this market.”
Source: Mingtiandi
TAIWAN
Prudential Life is planning to sell its life insurance unit in Taiwan by the end of this year. The US-based insurer has touched base with the Financial Supervisory Commission and approached potential buyers.
Domestic financial holding companies that do not have a life insurance subsidiary or a life insurance unit of smaller scale will likely be interested in the acquisition, such as E. Sun Financial, Taishin Financial, Yuanta Financial and Mega Financial.
As of September last year, Prudential life had total assets of NT$177 billion ($5.9 billion) in Taiwan, meaning it ranked 16th in size among the island's 21 life insurers.
Source: Wealth Magazine
INTERNATIONAL (EXCLUDING ASIA)
The head of California’s biggest pension fund has defended its chief investment officer, Ben Meng, against calls for him to be fired made by US Republican senator Jim Banks, who cited Meng's relationship with Chinese government officials.
In a letter to California governor Gavin Newsom on February 12, Banks attacked the fund’s investments – made through passive index strategies – in Chinese companies such as Hikvision and China Communications Construction Co. This followed similar pressure on Meng from US secretary of state Mike Pompeo.
Marcie Frost, chief executive of California Public Employees’ Retirement System, said in a written statement that the fund stands fully behind Meng, backing him as “a globally respected financial expert and a proud citizen of the US”. She also said Calpers relied on global investments to generate a 7% return and “has a fiduciary responsibility to our members and invest accordingly”.
Source: Chief Investment Officer; Pensions & Investments
The UK’s largest private pension fund is to close its developed-market stockpicking team and halve its external hedge fund holdings, as part of an overhaul that reflects a global shift towards passive investing amid disappointment with low returns and high fees.
The Universities Superannuation Scheme (USS), with £75 billion ($98 billion) under management, will hand the £14 billion that had been overseen by the stockpicking team to its quantitative and “responsible investment” units. The move came despite a robust performance by the team – which invests in the UK, Europe, the US and Japan – and has put 13 people are at risk of redundancy.
Following the withdrawal of half of its £1.8 billion investment in hedge funds on the back of returns and high fees, USS plans to have its in-house team employ some of the hedge strategies, said new CIO Simon Pilcher.
Sources: Bloomberg, Financial Times
Research spinout ventures from UK universities are increasingly seeking funding from abroad, from large investors such as Google Ventures, China’s Huawei and Singapore state fund Temasek, amid a squeeze on domestic funding.
“The likes of Huawei and other big investors such as [Japan’s] SoftBank have an active presence in the UK — they are constantly looking at little tech companies,” said Simon King, a partner at Octopus Ventures, one of the few UK investors in this market.
Jim Wilkinson, interim chief executive of Oxford Sciences Innovation, a research spinout business with ties to Oxford University that launched in 2015, said: “Rather than four companies a year, we are now spinning out 20 … When we started out we expected that most of the money would come from the UK. But nearly all of it comes from abroad now.”
Source: Financial Times