Insto roundup: Aussie supers suffer worst ever quarter; Cathay Life taps KKR for Apac fund
AUSTRALIA
Australia's superannuation sector has seen its worst quarter on record, with account balances plummeting by over 10% and the sector's total assets shrinking by almost 8%.
The Australian Prudential Regulation Authority said big downturns in global financial markets caused by the coronavirus pandemic had wiped 10.3% from retirement savings account balances in the March quarter, with the sector's total assets shrinking by A$200 billion ($135 billion) to A$2.7 trillion.
Source: The Sydney Morning Herald
Listed developer Mirvac will vie with super fund Cbus Property to develop the A$2 billion Treasury Square mixed-use project at the eastern end of the Melbourne CBD, after the state government narrowed the shortlist to two preferred parties.
"Cbus Property and Mirvac are currently selected as the two preferred bidders to explore the opportunity with the Victorian government to purchase and develop Treasury Square, following unprecedented interest in the site from national and international organisations," a spokeswoman for state agency VicTrack said.
Source: Australian Financial Review
House Economics Committee chairman Tim Wilson has asked regulators to investigate "vertical integration" in the industry superannuation sector, after conflicts of interest between fund Hostplus and related party IFM Investors were raised.
The request came after the Australian Financial Review revealed that Hostplus's infrastructure investment option products were held by IFM Investors – a fund manager in which the A$53 billion hospitality industry fund has an ownership stake – according to a third-party research review.
"I therefore believe Apra [the Australian Prudential Regulation Authority] should conduct a review into the matter and the extent that it is it a problem across the sector," Wilson wrote.
Source: Australian Financial Review
CHINA
The China Banking and Insurance Regulatory Commission has said it will relax rules for insurers investing in banks’ capital replenishment bonds, as Beijing seeks to ease the burden on smaller banks hit by the coronavirus pandemic.
The CBIRC will expand the range of tier-two capital and perpetual bonds available for investment by insurance firms by cancelling requirements regarding issuer banks’ assets and credit ratings. It also ended requirements that insurers only invest in tier-two capital bonds with AAA credit ratings, and in perpetual bonds rated at least AA+.
Source: Reuters
JAPAN
Japan’s ¥23.1 trillion ($214.2 billion) Pension Fund Association for Local Government Officials, has hired Nomura Asset Management to run an overseas private debt mandate.
The Tokyo-based fund, known locally as Chikyoren, did not provide further details in a notice posted on its website on May 29. It was Chikyoren’s third private debt mandate over the past year or so, following others awarded to Barings Japan in September and BlueBay Asset Management in May.
Source: Pensions & Investments
Japan's parliament revised a law to make more part-time and other non-regular workers join the employee pension programme as well as allow eligible recipients to choose to start receiving benefits from the age of 75.
Currently, part-time workers join the programme only when they work 20 hours or more a week at firms with more than 500 employees. Under the new law aimed at securing more premiums for higher pension payments, the scope of the part-time workers required to join the programme will be expanded in two stages – first to those at firms with more than 100 employees in October 2022, and two years later to those at firms with more than 50 employees.
Source: Nikkei Asian Review
KOREA
The National Pension Service (NPS) reported a -6.08% loss on investment in the first three months of this year, as its domestic and global stock positions returned -18.52% and -16.9% respectively.
The stock losses, which tumbled on fears over the coronavirus pandemic, eclipsed a 6.85% return from global fixed income that was bolstered by a series of benchmark rate cuts and quantitative easing steps by central banks and foreign exchange gains. Alternatives returned 4.24%, based only on interest and dividend incomes and foreign exchange gains.
NPS added that the rebound in stock markets during April and May led it to recoup most of these equity losses as of late May.
Source: Korean Investors
NPS is also expected to earn between W150 billion and W200 billion in proceeds from selling an office building in Seoul for about W520 billion, according to financial industry sources.
Six domestic asset managers were shortlisted for the property sale. Last year, CJ Cheiljedang Corp., the holding company of the food-to-entertainment CJ Group, renewed its lease of the building through 2027.
Source: Korean Investors
MALAYSIA
Malaysia's armed forces pension fund is weighing options for its controlling stake in Boustead Holdings, including taking the conglomerate private, said people with knowledge of the matter.
Lembaga Tabung Angkatan Tentera (LTAT), which holds a 59% stake in Boustead, has received approval for a loan to finance the deal, one of the people said.
Shares in Boustead, an investment group whose interests span real estate, financial services, plantations and manufacturing, surged as much as 18.6% on May 28 to hit their highest level since March 9.
Source: The Straits Times
SINGAPORE
A unit of Temasek is in talks for a potential investment of at least $400 million in Singapore shipping tycoon Chang Yun Chung's Pacific International Lines (PIL), according to sources familiar with the matter.
Heliconia Capital Management, a wholly owned subsidiary of Singapore's investment firm, could take a combination of equity and debt in the struggling shipping line, the sources said, asking not to be identified.
Heliconia is keen to take a stake in PIL in part to secure logistics for food supplies to Singapore amid the coronavirus pandemic, they said.
Source: The Straits Times
GIC led the most current capital raise in California-based Apeel Sciences' new S$353.53 million ($250 million) financing, according to a press release. This brings the Apeel’s valuation to over S$1.41 billion.
The new financing will enable the company to continue tackling the food waste problem on the global level.
Source: Singapore Business Review
TAIWAN
Cathay Life received regulatory approval to invest $50 million in a private equity fund overseen by US manager KKR, raising the insurer’s total private equity investments so far this year to $353 million in five foreign buyout funds.
The KKR Asian Fund IV mainly focuses on private equity deals in the Asia Pacific region. Cathay Life's other private equity investments this year include buyout funds focusing on North America and Europe.
Large Taiwanese life insurers like Cathay Life are seen expanding their investments into foreign private equity because their investment portfolios have substantially grown.
Source: Asia Asset Management
INTERNATIONAL (EXCLUDING ASIA)
A group of Republican lawmakers plans to unveil legislation this week to stop US companies and individuals from investing in foreign defence companies with ties to China’s military, according to a document seen by Reuters. It is the latest in a string of measures aimed at curbing American funding for China-based firms.
The planned bill would require treasury secretary Steve Mnuchin to submit a report to Congress listing foreign defence companies that have “substantial contracts with, ties to, or support from” the Chinese military.
Six months after the report is issued, US companies and citizens would have to divest from a specified list of firms and would be banned from making new investments in them.
Source: Reuters
As many as seven US public pension plans are at risk of running out of money to pay their members by 2028. The New Jersey Teachers and Chicago Municipal funds face the biggest risks as severe cash outflows are draining the assets of these two schemes.
Many US public pension plans had not fully recovered from the 2007/08 financial crisis before coronavirus struck, triggering turmoil across financial markets. The correction in the US stock market has increased the long-term structural problems across the entire US public pension system.
A slow recovery for the US stock market could result in Chicago Municipal’s funded position falling from 21% this year to 3.6% by 2025. New Jersey Teachers’ funded position is projected to fall from 39.2% to 23.2% over the next five years.
Source: Financial Times