ASIA 

South Korea has been by far the fastest growing pension industry globally by assets in the decade to end-2019, having expanded by an annuallised 12.4% in US dollar terms, found research on 22 markets by Willis Towers Watson’s Thinking Ahead Institute.

Korea was followed by Hong Kong (9.2% CAGR over the same period) and the US (7.8%), according to the Global Pension Assets Study 2020, released on February 10. Total asset growth across all 22 markets surveyed averaged 6.5% in the 10 years to 2019 and 15.2% last year, rising to a combined $46.73 trillion as of December 31. 

Total pension asset growth has been quite closely matched to global public market equity and bond returns over the last 20 years, found the research. Returns over that time have averaged 5.0% for a 60% global equity/40% global debt portfolio, while asset growth in US dollar terms has been 5.4%.

Source: Thinking Ahead Institute

AUSTRALIA / NEW ZEALAND

The A$168 billion ($112.3 billion) Future Fund believes it's becoming harder to spot and invest with high-quality fund managers, with active manager skills concentrating and the flood of cash into alternative asset classes is also taking up capacity with experienced hands.

Raphael Arndt

“There is a fight for skill across the world,” said chief investment officer Raphael Arndt. “It’s harder and harder for someone like us to continue to get capacity with the best quality managers.”

Part of Future Fund's response is a multi-million-dollar, multi-year programme to improve risk management and assessing manager performance, which includes working with firms such as Houston-based Novus to boost transparency over its holdings and building out a technology team.

It has also cut back on working with some asset managers that have not performed. The good managers are very receptive to conversations around fees and performance, Arndt said. “The poor managers less so. They’re not the right managers for us.”

Source: Deal Street Asia

Australia’s sovereign wealth fund quietly ratcheted up the risk in its $10 billion long-term debt portfolio to the point where two-thirds of its fixed interest holdings are now high-yield securities such as junk bonds and unrated private debt.

An analysis of the A$168 billion ($112.3 billion) Future Fund’s long-term rated debt portfolio has found sub-investment grade, or lower-rated, debt holdings – the riskiest form of corporate and private debt – have risen to now make up 63% of the portfolio. That figure has grown from 45% in 2015.

Source: The Australian

AMP has secured key regulatory approvals from China for its $2.5 billion life insurance divestment to Resolution Life, as the wealth group forges ahead with the transaction and a turnaround strategy, according to sources.

The Australian understands the China Banking and Insurance Regulatory Commission has indicated its support for the life deal in recent weeks.

Source: The Australian

Australia's Commonwealth Superannuation Corporation, the New Zealand Superannuation Fund and an investment managed by NZ asset manager Morrison & Co have partnered infrastructure investor Infratil to buy European renewable energy company Galileo Green Energy.

Infratil will pay €88 million ($56.17 million) for a 40% share of the Zurich-based company, while the other three will each buy a 20% stake. Galileo will invest in wind and solar power production and storage projects across Europe. It had already reached a deal to develop wind farms in Ireland.

Source: RNZ

CHINA

Anbang Insurance is set to sell a portfolio of Japanese rental apartments back to Blackstone for ¥300 billion ($2.7 billion) in what would be the largest property deal ever in Japan.

Stephen Schwarzman’s Blackstone, which has $163 billion in real estate assets under management, has signed an agreement to take back possession of 221 rental apartments the company had sold to Anbang three years ago for around ¥260 billion.

Source: Mingtiandi

JAPAN

The Government Pension Investment Fund (GPIF) reported a profit of ¥7.4 trillion ($67.4 billion) in its financial year’s third quarter, as both domestic and foreign stock markets rallied. The GPIF, which managed ¥169 trillion of assets as of end-December, said its return on overall assets was 4.6% over the October-December period.

GPIF’s Japanese stock portfolio achieved an 8.6% return and the foreign stock portfolio earned 9.7%. The return was 0.9% for overseas bonds, while Japanese debt incurred a 1% loss.

The pension fund halted disclosing the amount and ratio of investments in different asset classes from the second quarter, as it aimed to avoid affecting the market with such details ahead of a planned portfolio review.

Source: GPIF

Speculation is circulating that Japanese authorities have been using cash from the ¥160 trillion ($1.45 trillion) Government Pension Investment Fund to sell the yen to prevent the safe-haven currency from rising, as it would be expected to do amid the coronavirus crisis.

China's central bank is also suspected to be conducting huge open market operations to buy yen. One market player credited this week's yen-dollar exchange rate moves to a “joint fund supply by Japan and China”.

Another market participant wondered whether there might be "incidental cooperation between Japan and China to avoid a global market crash."

Source: Nikkei Asian Review

Aeon Financial Service has revealed plans to enter the life insurance market by taking control of a Japanese unit of global giant Allianz. Aeon Financial, which is an affiliate of retailer Aeon Group, said that it will buy 32,400 freshly issued shares in Allianz Life Insurance Japan.

The transaction, which is estimated to be worth ¥3.6 billion ($32.78 million), will allow Aeon to hold 60% of the voting rights in the insurer. The deal, which will take place under a third-party allotment scheme, is expected to complete on March 31.

Source: Jiji Press

KOREA

Korea Investment Corporation (KIC) reported a 15.4% rate of return on investments for 2019 on February 6, lifting the value of its portfolio to $157.3 billion.

For the year, KIC reported a return of 27.5% on the fund's equity allocations, 7.5% on fixed income and 7.6% on its alternative holdings. The result marked a rebound from 2018, when a sell-off of global equities in the last quarter resulted in a negative return on investments of -3.7%.

Source: Pensions & Investments

In addition, KIC will open a San Francisco office within the year to improve its deal sourcing capability for technology startups and other alternative assets, while beginning to entrust domestic asset managers with part of overseas stocks and fixed income investment.

Source: Korean Investors

National Pension Service (NPS) has sharply increased its stakes in major listed firms after investment rules were eased at the beginning of this month.

As of end-January, the number of listed companies in which Korea's largest public pension fund held a stake of 5% or more came to 313, up 7.2% from the end of 2018, according to data compiled by FN Guide. NPS held a 10% or more stake in 96 companies, up 20% year-on-year.

Source: Yonhap News Agency, The Korea Herald

Furthermore, NPS is unlikely to roll out its platform of greater shareholder activism in time for the March proxy season due to delayed internal preparations.

“We’re still in the process of setting up the new subcommittees,” Cho Heung-seek, vice president of the NPS Fund Management Committee told reporters February 5, adding that the preparations might not be ready by the March meetings.

Source: Maeil Business News Korea

Public Officials Benefit Association (Poba) and California State Teachers’ Retirement System (Calstrs) will set up a $312.5 million joint venture (JV) to expand co-investment into equities in US multifamily properties.

Calstrs and Poba will contribute $150 million each to the new JV, which will invest in equities in core-plus multifamily real estates located in 29 cities across the US. Apartment manager Fairfield Residential, which is majority owned by Calstrs, will commit $12.5 million as a general partner to the venture.

The venture will become their third 50:50 JV following two $400 million ventures they launched in 2018 and 2019, respectively, to invest in US real estate debts.

Source: Korean Investors

MALAYSIA

The Securities Commission Malaysia (SC) has worked with pension funds and institutional investors in the country to create a checklist of questions to encourage more effective shareholder engagement at annual general meeting (AGMs).

The questions provide a basis for investors to establish potential performance gaps on corporate governance and sustainability topics, including remuneration packages and appointing directors.

Syed Zaid Albar, chairman of the commission, said, “Shareholders play an important role in driving responsible corporate behaviour and the AGM is one of the platforms where they can raise material issues for discussion or seek explanation from the board and management. The AGM Corporate Governance Checklist is meant to guide shareholders on key issues they may need to consider or raise at an AGM before they exercise their voting rights.”

Source: Responsible Investor

The Malaysian government could reduce the employees’ contribution to the Employees Provident Fund (EPF) by three percentage points, together with other measures, to boost domestic consumption and minimise the impact of the coronavirus outbreak, proposed Soh Thian Lai, the president of the Federation of Malaysian Manufacturers. 

“This will put more cash in the rakyat’s pocket, thereby increasing consumer spending which can further stimulate the economy.” A similar reduction was done in 2016. The organisation also proposed a 2% reduction in the sales and services tax for the next 12 months, as well as that of electricity and gas tariffs.

Source: Free Malaysia Today

SINGAPORE

Singapore state investor Temasek has invested an undisclosed amount in FNZ, the first Scottish fintech unicorn.

Temasek joins an existing consortium of investors including Caisse de depot et placement du Quebec and Generation Investment Management. The two acquired majority stake in FNZ in October 2018, in a deal that valued the company at nearly £1.7 billion ($2.2 billion).

Source: Deal Street Asia

TAIWAN

Bureau of Labor Funds (BLF) posted an 11.81% investment return in 2019, on the back of accommodative central bank policies and easing trade tensions.

The six funds that the asset owner oversees registered a total investment income of NT$473.4 billion ($15.73 billion), reversing an investment loss in 2018. Its total assets stood at NT$4.28 trillion of total assets as of December 2019.

Source: BLF

THAILAND

The Thai arm of Japan’s Tokio Marine Insurance and Thailand’s Safety Insurance completed their merger to form Tokio Marine Safety Insurance Thailand (TMSTH).

Both firms have received regulatory approval from Thailand’s Office of Insurance Commission (OIC) to complete their integration. The move has also made the new entity one of the largest operations in Asia for the Tokio Marine Group after it took over IAG’s stake in Safety Insurance for $390 million in 2018 summer.

Suteechai Santivarakum from Safety Insurance has taken on the role of TMSTH’s chief executive, while Hironori Kiryu is the president of the newly created organisation.

Source: Deal Street Asia, Finews

INTERNATIONAL 

The US secretary of state has warned that some US pension plans’ investments may be funding Beijing’s crackdown on China’s Muslim minority in Xinjiang province or even putting US military personnel at risk, in the latest sign of political pressure on local asset owners to reconsider investments in China.  

Mike Pompeo

At the National Governors Association’s winter meeting in Washington, DC, Mike Pompeo said: “As of its latest public filings, the Florida retirement system has invested in a company that in turn has invested in surveillance gear that the Chinese Communist Party uses to track more than 1 million Muslim minorities.”

He added that the California Public Employees’ Retirement System, the country’s largest pension fund, was invested in companies that supply the People’s Liberation Army, without offering details. “That puts our soldiers, sailors, airmen and marines at risk,” Pompeo said.

Source: Bloomberg

Canadian defined-benefit pension plans posted a median return of 13.6% last year, thanks to a sharp increase in equity market returns later in the fourth quarter, according to data from Northern Trust. That followed a median loss of -1% in 2018.

The median Canadian DB plan generated a 1.9% return during the fourth quarter, up from 1.6% during the third quarter, despite geopolitical tensions. Northern Trust attributed the strong showing to favourable monetary policy, progress on US-China trade negotiations and potential clarity on the path to a Brexit resolution.

Source: Chief Investment Officer