Insto roundup: Future Fund chair slams central banks; Korean insurers under scrutiny

AUSTRALIA 

The world’s big central banks are inflating a bubble in technology stocks that will lead to a “clean-out” on global equity markets, the chairman of Australia’s $135 billion sovereign wealth fund has warned. 

Rock-bottom interest rates and bond-buying programmes put in place to cushion the impact of the pandemic last year have left economies and markets vulnerable to a shock, Peter Costello said in an interview.

“What worries me is having expended all of their [central banks’] firepower, there is not much left for the next crisis, and there will be another crisis,” said Costello, a former Australian treasurer who heads the Future Fund. 

Source: Financial Times

Interviews with five Australian superannuation funds reveal a group of investors largely unconcerned about the risk of inflation, even as interest-rate jitters fuelled the recent meltdown in the US bond market.

"The markets are wrong" about inflation expectations, said Sicilia, chief investment officer of the A$56 billion ($44 billion) HostPlus fund in Melbourne. "Deflationary forces are bigger. Interest rates are going to stay at effectively zero."

While bond markets suggest there may be "inflation in the pipeline," it might be short-lived, said John Pearce, Sydney-based investment chief at the A$90 billion UniSuper. "You look at the marginal cost of everything just plummeting because of the improvements in technology – I don't see that stopping any time soon.”

Source: Pensions & Investments

An Australian senator has argued that superannuation funds should not be able to take short positions or participate in securities lending to short sellers.

Queensland Liberal National Party senator Gerard Rennick first compared the super industry to "1930s Chicago gangland gangster wars", before saying that super mostly only benefits the wealthy and lines the pockets of fund managers.

Then he moved on to the issue of super funds and short selling. Rennick commended AustralianSuper and QSuper, saying they have "stopped short selling shares."

Source: Financial Standard

CHINA

Chinese investment into Australia fell by 61% in 2020 to the lowest level recorded by the Australian National University in six years, coinciding with a worsening diplomatic dispute.

The annual study by the university’s East Asian Bureau of Economic Research recorded A$1 billion ($783 million) of Chinese investment in 2020, consisting of real estate (45%), mining (40%) and manufacturing (15%) deals.

Source: East Asian Bureau of Economic Research; South China Morning Post

KOREA

Korea's National Pension Service posted an investment return of 9.7% in 2020, helping its assets grow by 13.2% to W833.7 trillion ($765.9 billion).

The preliminary figure was the highest return it had achieved in the past decade after its 11.3% gain in 2019, according to a translation of the document from a meeting of the fund's management committee. The 2020 figure will be finalised in June.

Source: Pensions & Investments

Korea's Financial Supervisory Service (FSS) will keep a closer eye on insurance companies’ overseas alternative investments, after discovering around W1.2 trillion ($1.07 billion) of impaired assets in insurers' portfolios.

The regulator said on February 22 that it would create a risk management framework for insurers to deal with this issue within the first half of the year. The guidelines will oversee various processes, such as on-site due diligence and checking legal management relationships of collateral. It will also require insurers to institute a review process on investments with high loan-to-value ratios.

MALAYSIA

EPF has launched a $600 million sharia-compliant private equity separately managed account (SMA) fund. The fund claims it is the world’s first institutional investor to launch a sharia PE direct and co-investment fund.

The three $200 million SMAs will be managed by BlackRock, HarbourVest Partners and Partners Group. The fund has a global mandate focused on direct and co-investment into growth and buyout transactions, an investment period of 2021-2025 and a term that will run from 2021 to 2031.

EPF’s PE strategy covers growth, buyout, middle-market capitalised and large-market capitalised strategies. It has a total of $12.05 billion in commitments across 106 active investments.

Source: EPF

Malaysian sovereign wealth fund Khazanah Nasional is to inject RM3.6 billion ($891 million) into Malaysia Airlines as part of the flag carrier's RM16 billion restructuring plan. The move is set to complete by early March.

Khazanah is the only shareholder in the embattled airline. Prior to Covid-19, the airline was burdened with high costs associated with two major flight incidents in 2014, which prompted the state fund to take the airline private that year.

Source: The Edge Markets

SINGAPORE

Singapore sovereign wealth fund GIC’s real estate arm has formed a joint venture with Hong Kong-listed developer Kerry Properties to acquire a mixed-use development site in Shanghai. GIC will hold a majority 60% stake in the JV.

The land, valued at Rmb6.013 billion ($930 million), is set to comprise retail space, offices and residential space.

Lee Kok Sun, GIC Real Estate's chief investment officer, said the project would capitalise on robust domestic consumption in Shanghai. 

Source: Mingtiandi

Singapore state investor Temasek has co-led a $230 million round in Chinese biotech startup Clover Biopharmaceuticals alongside venture capital firm GL ventures. 

Clover has raised at least $400 million in the past 12 months. The company develops protein-based vaccines and biologic cancer therapies. It expects to initiate a global phase 2/3 efficacy trial for a Covid-19 vaccine.

Temasek’s recent biotech investments include a $250 million private placement by Nasdaq-listed BioNTech, which is also testing a Covid-19 vaccine candidate, and in US-based Glympse Bio’s $46.7 million series B round.

Source: DealStreetAsia

Temasek has led a $77.1 million series C round of financing in Chinese software-as-a-service startup Black Lake Technologies. Its existing holders, which include venture capital firms GGV Capital and Lightspeed China Partners, all participated in the round.

Shanghai-based Black Lake provides plant floor collaboration tools for factories in Greater China and Southeast Asia. The latest round brings its total investments to around $124 million.

Source: DealStreetAsia

Temasek has participated in a $10 million seed funding round in plant-based food startup Next Gen. Venture capital firms K3 Ventures, EDB New Ventures and Febe Ventures also participated in the round.

Singapore-based Next Gen competes with a number of foreign and local players in the alternative meats space. Last December, Temasek participated in Sydney-based V2food’s $55 million Series B funding round. It is also an investor in US-based Impossible Meats and Calysta. It backs Singapore's Shiok Meats through its investment in Big Idea Ventures’s New Protein Fund.

Next Gen’s differentiating factor is that its products seek to emulate chicken meat, while other players focus on ground beef or pork.

Source: DealStreetAsia

GIC will acquire 9% of listed Indonesian lender Bank Jago via a rights issue in March, according to a prospectus filed with the Indonesian stock exchange. The $222 million investment will allow the sovereign fund to tap the country’s growing digital banking space.

Bank Jago’s CIO said the fresh funds would be used to finance business expansion, develop IT infrastructure and develop the bank's human capital. The bank is also backed by Indonesian ride-hailing unicorn Gojek which in December spent $160 million to raise its stake in Bank Jago to 22.16%. 

Source: Straits Times

US cryptocurrency platform Anchorage raised $80 million in a series C round led by Singapore’s GIC. US venture capital firms Andreessen Horowitz, Blockchain Capital and Lux Capital also participated.

Anchorage’s president said the funding would be used to scale operations in response to what it perceives as a growing demand for participation in the digital asset space among corporations and traditional financial institutions.

GIC’s previous crypto investments include San Francisco-based crypto exchange Coinbase, which completed a $300-million fundraising in 2018 that valued the firm at $8 billion.

Source: DealStreetAsia

INTERNATIONAL (EXCLUDING ASIA)