Insto roundup: CIC's returns fall into the red; Khazanah could sell assets to pay for debt

AUSTRALIA

Hostplus and Club Super agreed to merge into a single A$43 billion superannuation fund for the hospitality and recreation sectors by November 1, in the latest consolidation to take place in Australia’s superannuation fund industry.

The agreement comes after talks began on July 3. Hospitality and tourism sector fund Hostplus is by far the larger of the two funds with about 1.2 million members and A$42 billion in funds under management.

“We embrace this opportunity to welcome Club Super members, employers and key staff into the Hostplus family," said Hostplus chief executive David Ella.

Source: Nine.com.au

Superannuation fund, Christian Super has announced the appointment of Ethical Partners Funds Management, an independent boutique with funds under management (FUM) of A$1.6 billion, for its Australian equities mandate.

The fund, which ethically screened all of its investments since 2006, said that Ethical Partners FM’s focus on ethical considerations as a core part of the investment process was an important factor in manager selection.

“We are delighted to be working closely with an organisation with which we share similar core values. We both aim to provide investors with good returns over the long term by investing in an ethical way,” said Nathan Parkin, investment director of Ethical Partners.

Source: Money Management

CHINA

CIC’s overseas portfolio posted a net annual return of -2.35% in 2018 on the back of global economic slowdown and trade frictions, according to its 2018 annual report. But the sovereign wealth fund said that this level has outperformed its internally set annual assessment benchmark.

As of December 31, 2018, CIC had realised an annualised cumulative 10-year net return of 6.07% and an annualised cumulative net return of 5.18% since its inception on September 29, 2007.

The weight of alternative investments (including direct investments) in the company’s overseas investment portfolio reached 44.1%, up 4.8 percentage points from the previous year.

Source: CIC

QIC, the $80 billion Queensland-based asset management giant has received official approval for its partnered fund that will invest in China corporate bonds.

The $50 million QIC Ping An China Corporate Bond Fund is a partnership between QIC and China's Ping An Asset Management Company (PAAMC).

The fund is one of the first Australian funds to give investors access to China's corporate bond market, which is the second largest in the world and was traditionally limited to locals before the Bond Connect opened access to foreign investors in July 2017.

The two companies first signed a memorandum of understanding in November 2016, making it QIC's first relationship with a Chinese institution.

Source: Financial Standard

INDONESIA

Canada Pension Plan Investment Board will make its first infrastructure investment in Indonesia in a deal to acquire a minority stake in a private toll road operator in the country from Malaysian sovereign wealth fund Khazanah Nasional.

Under a partnership investment, CPPIB will acquire a 45% stake in PT Lintas Marga Sedaya (LMS), the concession holder and operator of the Cikopo-Palimanan toll road. The deal is expected to be completed in the fourth quarter.

In its total fund, CPPIB had C$33.1 billion ($25.3 billion) invested in infrastructure assets as of June 30. CPPIB's total fund had C$400.6 billion in assets at that time.

Source: Pensions and Investments, Asia Asset Management

JAPAN

The Japanese government intends to lower the threshold above which approval is needed to hold a stake in sensitive companies from the current 10% to potentially as little as 1%. That would require many institutional investors to seek approval whenever they invest in listed aerospace, electricity, telecommunications, broadcasting, railway and software companies, creating a significant new hurdle to investment in Japan.

Another measure being considered, according to officials, would affect the ability of foreign investors to nominate new board members at companies’ annual shareholder meetings. This right has been exercised by activists in several recent situations, which raised hopes that corporate Japan was becoming more susceptible to tactics common in the US and elsewhere. Foreign investors said the changes would be likely to reduce foreign investment into the country. 

Source: Financial Times

The Government Pension Investment Fund (GPIF) reported that four out five of the environmental, social and governance (ESG) it had selected to follow outperformed their parent indices and market averages over the past two years.

The $1.47 trillion pension fund has approximately ¥3.5 trillion ($32.4 billion) in assets under management tracking ESG indices. The ESG indices selected by the fund include the MSCI Japan ESG Select Leaders Index, the MSCI Japan Empowering Women Index, and the FTSE Blossom Japan Index. The indices are mainly composed of medium and large-cap stocks.

It noted that while the MSCI Japan ESG Select Leaders Index and the MSCI Japan Empowering Women Index underperformed the Tokyo Stock Price Index (TOPIX) over one year beginning April 2017, they outperformed the benchmark over two years beginning on the same date.

Source: Chief Investment Officer

KOREA

South Korean institutional investors are on track to pour nearly $1 billion into US and UK airports in 2019, including the planned $51 million co-investment in the John F. Kennedy Airport’s Terminal One redevelopment project.

For the Terminal One project for which the Carlyle Group is leading financing of about $13 billion, Seoul-based STIC Alternative is looking to raise $51 million from Korea for co-investment, according to investment banking sources on September 20. The fundraising comes after the company collected $51 million from Korean institutions, including Hyundai Marine & Fire Insurance and NH Investment & Securities, earlier this year, to commit to the Carlyle Global Infrastructure Opportunity Fund.

Source: Korean Investors

MALAYSIA

Khazanah Nasional will sell off assets that are not useful to pay off its debts, pending a decision about whether the sovereign wealth fund should sell off all its assets, said Prime Minister Mahathir Mohamad.

“They are just studying it whether they should, but no decision has been made, ” he said, adding that it was better for Khazanah to sell assets which were not useful. “Those that are not useful to us, we will sell to raise funds to overcome our debts. “We must remember that the previous government borrowed more than MYR1 trillion (239.3 billion). That is a burden for us because they borrowed and the money isn’t invested but it is hidden."

Source: The Star

SINGAPORE

Investors should ensure they have a range of options, including keeping some cash as "dry powder" for more immediate needs in uncertain market conditions, said GIC chief executive Lim Chow Kiat as he outlined the Singapore sovereign wealth fund's strategy for what are challenging times.

The fund's annual report noted in July that it

GIC is also expanding its networks of partners and investee companies, while investors are "hard put to find their footing" with the world at a turning point and the geopolitical mood souring amid rising populism and trade protectionism.

Source: Straits Times