Insto roundup: China lifers’ profits surge; GIC's new deputy chairman

AUSTRALIA

The Future Fund has grown its assets to A$154 billion ($108.6 billion). The Australian sovereign wealth fund garnered a 10-year return of 10.4% per annum, well exceeding its target of 6.5%. It added A$94 billion ($66.3 billion) to its initial contribution of A$60.5 billion in 2016.

While Peter Costello, chairman of the fund, attributed the strong returns in public equity markets to the Federal Reserve’s decision to hold interest rates and abating trade disputes, he warned of relatively lower returns over the long run due to structural challenges.

Source: SBS News

BRUNEI

US bank JP Morgan and Germany’s Deutsche Bank both banned staff from staying in hotels owned by the Brunei Investment Agency, due to the petro state’s recent decision to introduce medieval Islamic law punishments, including stoning to death people that conduct homosexual or extra-marital sex.

The Brunei state owns several luxury hotels around the world through its sovereign wealth fund, including London’s Dorchester and the Berverly Hills Hotel in Los Angeles. The Sultan of Brunei has a personal wealth of $20 billion, while the Brunei Investment Agency holds around $40 billion in assets.

Source: Financial Times, Gay Star News, New York Times

CHINA

China Life’s net profit grew to Rmb26 billion ($3.86 billion) for the first three months of 2019, 92.6% higher than the same period last year, thanks to the sharp rise of the domestic stock market, the insurer said in its first quarter report.

Ping An Group’s net profit rose by 77.1% year on year to Rmb45.52 billion, while China Pacific Insurance Company’s (CPIC) net profit rose 46.1% to Rmb5.48 billion, their first quarter reports show.

China Life’s investment assets stood at Rmb3.19 trillion as of March 2019, Ping An’s investment portfolio of insurance funds (including life and property and casualty) was Rmb2.88 trillion, while CPIC’s investment assets were worth Rmb1.12 trillion.

The largest lifer's annualised net investment yield was 4.31% in the first quarter of 2019. Ping An’s investment portfolio of insurance funds achieved an annualised net investment yield of 3.9%, while CPIC has a 4.4% annualized net investment yield during the period.

Source: China Life, Ping An, CPIC

JAPAN

Government Pension Investment Fund (GPIF) has put out a request for proposal (RFP) for information on multi-manager fund investment in the traditional asset classes equity and fixed income.

GPIF expects the information to be useful enough, so that the pension fund can eventually develop its own multi-manager funds. GPIF is planning to set a new investment mandate where manager of managers are hired, in order for the pension fund to pursue excess returns from the investment plans.

The multi-manager investment programs must be either an equity-only program or a fixed income-only one. We do not assume having both asset classes in a single mandate. The deadline for submission is May 17.

Source: GPIF

Japan Post Insurance said the firm is more cautious on risk-taking in the financial year through March 2020 due to broad uncertainties ahead as well as its view that the current economic cycle is maturing.

The insurance arm of formerly state-owned conglomerate Japan Post Holdings, said it expects to have about ¥1 trillion ($9 billion) of new funds for investment in 2019/20, which is half of the previous year’s amount, mainly due to declining premium income.

The firm, popularly known as Kampo, said it plans to increase holdings of currency-hedged foreign bonds as domestic bond yields were likely to remain low, while keeping its domestic and foreign stocks holdings steady unless those assets dip.

Source: Reuters

Japan’s Daido Life Insurance plans to increase foreign bond holdings in the current financial year through March next year.

Within foreign bonds, Daido mainly looks to step up holdings of European bonds outside of Germany and France, Kenya Takahashi, general manager of the firm’s investment planning department, told Reuters. Daido increased the holdings of foreign debt by net ¥20 billion ($179 million), raising those of corporate bonds by 190 billion yen while decreasing those of government bonds by 170 billion yen.

Source: Reuters

Dai-ichi Life Insurance, a subsidiary of Dai-ichi Life Holdings, officially launched operations in Cambodia with a ceremony last week. Created in 1902 and based in Tokyo, the company says it will be the first Japanese life insurer tapping into opportunities in the country.

Allen Thai, CEO of Dai-ichi Life Insurance in Cambodia, said the Kingdom is the eighth country where the firm has expanded, following Vietnam, Thailand, Indonesia, India, Japan, Australia, and the United States.

Source: Khmer Times

KOREA 

The Public Officials Benefit Association (Poba) will double co-investment with the California State Teachers’ Retirement System (CalSTRS) to W880 billion ($760 million), and it is also in discussion with the Teacher Retirement System of Texas (TRS) to increase co-investments, a Poba source said Monday (April 29). 

In 2018, the $11 billion pension scheme for South Korea’s local government employees, launched $200 million joint ventures with CalSTRS and TRS respectively to invest in US real estate debts. PCCP LLC, a Los Angeles-based real estate investment firm, manages debt investments for the Poba-CalSTRS JV which focused on senior loans and multi-family and retail assets.

Poba has entrusted W1.2 trillion to US investment funds, including the $400 million commitments to CalSTRS and TRS. US investments account for 55% of Poba’s 5-trillion-won global portfolio which makes up 41% of its total assets under management.

Source: KoreanInvestors

Target-date funds (TDFs) are fast gaining ground in South Korea as an alternative to conventional private pension funds generating lower-than-expected yields, with the market set to exceed W1.5 trillion ($1.3 billion) this year in just three years since it was first introduced in the country.

According to Seoul-based financial data provider FnGuide, TDF assets under management reached W1.48 trillion won as of April this year in Korea, eight times higher than two years ago, thanks to growing demand for stable but high-profit investment method in the fast-graying society.

TDFs are not a major product in the W130 trillion private pension market in Korea, where fund assets make up W13 trillion, but the growth pace is noticeable, according to market experts. Samsung Asset Management launched the first TDF product in the country three years ago, and nearly 70 TDFs are now operated by seven asset management companies.

Source: Maeil Business News Korea

MYANMAR

Citizen Business Insurance (CB Insurance), First National Insurance, Grand Guardian Insurance and Capital Life Insurance will form joint ventures with foreign insurers, said U Thaung Han, managing director of CB Insurance and CB Insurance will be forming its joint venture with Thai Life Insurance, which is based in Thailand, to offer life insurance products in Myanmar,” U Thaung Han said.

GIC appointed Singaporean deputy prime minister Tharman Shanmugaratnam to be its deputy chairman from May 1. In his new role, Tharman will help the chairman lead the sovereign wealth fund’s long-term asset allocation and portfolio performance.

Tharman wears a multitude of hats in Singapore. He was previously a director of GIC, plus chairman of its investment strategies committee (ISC) since July 2011. In addition, he is the chairman of the Monetary Authority of Singapore, the city state’s central bank and financial regulator. 

Source: GIC, Dealstreet Asia

INTERNATIONAL

The biggest concern among insurers globally is deterioration of credit quality in their investment portfolios, while worries about interest rates have ebbed, according to research by Goldman Sachs Asset Management.

The firm’s eighth annual global insurance survey found that 38% of respondents cited worsening credit quality as a worry, up from 23% the year before. Only 7% were concerned about interest rate rises, down from 30% in 2017.

Meanwhile, 82% believe the US economy will enter a recession in 2020 or 2021, while only 2% predict a recession in 2019.

Source: Goldman Sachs Asset Management

The 100 biggest US defined-benefit corporate pensions funds recorded an average loss of 2.8% last year – their first down year since 2008 – driven largely by poor equity-market returns, according to new research.

The Milliman Corporate Pension Funding Study said the expectation had been for a gain of 6.6%, down from an expected return of 6.8% for 2017 and 7.0% for 2016.

Respondents’ average equity allocation continued to fall as they de-risk, to 31% at end-2018, down from 36.1% a year earlier. The fixed income allocation climbed to 49.4% from 45.0% over the same period.

Source: Milliman

The New York State Teachers’ Retirement System has approved commitments of up to $240 million across two Asia-focused private equity vehicles, according to the minutes of an investment committee meeting held on April 24.

Source: DealStreetAsia