Insto roundup: Future Fund cuts risky assets; Temasek to go carbon neutral
AUSTRALIA
The Future Fund reported a 1.4% return during the fourth quarter on strong equity market performance in the final three months of the year. The sovereign wealth fund's portfolio ended the year at A$168 billion ($117.5 billion), up 14.3% from the year before and an annualised 9.9% over the past 10 years.
The fund, cut some risk during the three months ending in December, selling some Australian and developed market equities, private equity, property, debt and alternatives, the statement showed. Cash increased to 13.7% of the portfolio, versus 11.4% in September, and its highest level since December 2018. Meanwhile global developed markets equities stood at 19%, versus 19.2% in the previous quarter, and private equity was 14.9% (versus 15.8%)
“We’ve been carefully positioning the portfolio to navigate the challenging investment environment,” said chief executive David Neal in the statement. “We are maintaining an average level of risk. We continue to prioritise portfolio flexibility to ensure we can adjust the portfolio quickly to respond to emerging opportunities and risks.”
Source: Pensions & Investments, Professional Planner
The Future Fund also announced its first direct investment in data centres, acquiring a 24.1% stake in Canberra Data Centre (CDC) for an undisclosed amount.
Raphael Arndt, chief investment officer (CIO) of the A$168 billion ($113.49 billion) sovereign wealth fund, said the acquisition was “the largest direct investment we have made in this space”.
“The business is expanding and investing in new facilities and we’re looking forward to supporting that growth,” he said. The deal was finalised in December. According to sources, Future Fund’s stake would be worth at least A$250 million, based on the value of existing shareholders' stakes.
Source: IPE Real Assets
TCorp, the investment arm of the New South Wales state government, hired infrastructure specialist Diana Callebaut from Cbus Super to become its head of real assets. She will start her new role at the beginning of February.
Callebaut will lead and manage the real assets team, driving its strategy, investment processes and client outcomes across all unlisted investments. Over the past six months, TCorp has been active in its global real assets investment program, co-investing with global pension funds.
Prior to joining the Australian state investor, Callebaut worked at Cbus for four years, where she built up and led the infrastructure team. She has more than 14 years’ experience in the financial services and consulting industry, including working at KPMG and investment banks and venture capital organisations.
Source: Investment Magazine
Milford Asset Management hired equities portfolio manager Alex Whight from AustralianSuper to become the first member of its global equities team to be based outside of New Zealand. He works in Sydney.
Whight had worked at AustralianSuper for close to five years. Before that he was an equity research analyst at JP Morgan and he had also been an associate research analyst at Tyndall Investment Management.
Whight will work on Milford's existing global equities strategy while the firm prepares a new strategy, likely for later this year.
Source: Financial Standard
HONG KONG
The Hong Kong Exchange Fund has earned HK$247.2 billion ($31.8 billion) in 2019, representing an investment return of 6.2% and increasing the total assets of the fund to HK$4.26 trillion at the end of last year.
Specifically, the investment portfolio achieved a rate of return of 9.7%, while the backing portfolio gained 2.5% during 2019. The long-term growth portfolio (LTGP), which holds mainly private equity and real estate investments, recorded an annualised internal rate of return of about 12.4% since its inception in 2009 up to the end of September 2019.
Source: HKMA
INDIA
Singapore investment fund GIC-backed real estate developer DLF intends to invest Rs50 billion ($751.6 million) to develop a 6.8 million square feet information technology park in Chennai.
The project – a joint venture with Tamil Nadu Industrial Development Corporation (Tidco) – will boost DLF’s commercial portfolio in Chennai to nearly 14 million square feet. The firm currently runs a seven million square feet IT park at Manapakkam.
“Tamil Nadu has always been a destination of choice for corporates and MNCs due to its talent pool and favourable business environment. We are investing Rs5,000 crores in phases for developing our fourth project - DLF Downtown, Taramani in Chennai,” said Mohit Gujral, chief executive of DLF.
Source: The Economic Times
INDONESIA
PT Taspen has appointed Antonius N.S. Kosasih as chief executive in a shareholders’ meeting on January 17.
Kosasih was previously investment director of the Indonesian civil servant pension fund, and has replaced Iqbal Latanro in his new role.
Source: CNBC Indonesia
Taspen posted in published financial statements a net profit of Rp388.24 billion ($28.5 million) in 2019, a 42.97% increase from that of 2018, which stood at Rp271.55 billion ($19.92 million).
The new chief executive explained that the company enjoyed reasonably good profit due to an increase in premium income by Rp977 billion and an increase in investment income by Rp1.46 trillion; respective increases of 12.08% and 19.08% respectively over the year compared to 2018.
Kosasih added that the spike in performance was the result of the implementation of Taspen's strategies and policies in investing prudently and safely. The company placed around 86.2% of its investments in low-risk assets with regular fixed returns last year, such as government debt papers, corporate bonds and time deposits.
Source: Investing.com, The Jakarta Post
JAPAN
Nippon Life Insurance plans to double its investment in foreign real estate and infrastructure by early next year. Japan’s largest private life insurer plans to commit a total of ¥350 billion ($3.2 billion) to investments in real estate and infrastructure, mostly in North America and Europe, through funds of funds, said Kazuhide Toda, the company’s chief investment officer.
The investment would be made gradually over years, by responding to fund managers’ capital calls. The size of its investments in alternative assets was likely to about ¥380 billion by early 2021, double the level at the end of the last financial year, in March 2019, Toda said.
The move came amid growing expectation that low interest rates in Japan and other developed countries are likely to stay for a long time and therefore the insurer will need a new source of income.
Source: Reuters
Japanese investors bought the most emerging-Asian bonds on record last year, and their appetite is growing, money managers said.
They snapped up almost ¥1 trillion ($9 billion) of Asian debt in the first 11 months of 2019, according to the latest balance-of-payments data. Even though it’s one month short of a year, that’s a record in data going back to 2005.
A collapse in developed-nation bond yields last year as the Federal Reserve led a new easing cycle has pushed traditionally conservative Japanese investors into riskier assets. With an improving global trade outlook, emerging markets such as China and Indonesia will appear even more attractive.
Source: Bloomberg
KOREA
The number of South Korean institutions that have embraced shareholder activism by adopting the stewardship code surged in 2019, raising tensions for companies ahead of their general shareholders meetings in March. According to the Korea Corporate Governance Service, the number of participating organisations reached 116 as of the end of last year, up from 73 the previous year. This year, three more have signed on.
Currently, asset management companies account for the greatest number of participants with 42 firms, followed by 36 private equity firms, five insurance companies and three brokerages. They also include two pension funds, two banks and two investment advisers.
The stewardship code sets forth guidelines for institutional investors, allowing them to participate actively in corporate governance by exercising their voting rights in the interests of their beneficiaries. The code was introduced in December 2016. The National Pension Service adopted the code in July 2018.
Source: The Korea Herald
The overall value of the shares in Samsung affiliates and subsidiaries held by South Korea’s largest institutional investor, the National Pension Service, jumped nearly 60% over the past year, according to data made public January 28.
The NPS’ shares in 13 Samsung units were worth W49.28 trillion ($41.7 billion) as of January 22, up 57% from W31.4 trillion on January 2 2019, according to financial research firm FnGuide.
The whopping increase is largely attributable to the conglomerate’s crown jewel Samsung Electronics, which saw its closing price increase 56.7% – from W38,750 won to W62,300 – during the cited period.
Source: The Korea Herald
Insurers in South Korea announced that they will roll out new services and adopt more advanced technology, as the sector fights off declining profits. The companies also revealed plans to ramp up investments in technology-oriented start-ups, a trend on the rise in Asia as reported by AsianInvestor.
Korea’s general insurance industry has suffered two consecutive years of decreasing net profits. From W3.9 trillion ($3.4 billion) in 2017, net profits decreased to W3.3 trillion in 2018. For 2019, net profits are expected to decrease by 30% to W2.3 trillion.
The market is said to be saturated, and rising insurance premiums have also contributed to the lacklustre performance.
Source: Asia First
Hana Financial Group will take over The-K Non-Life Insurance, the insurer affiliated with the Korea Teachers Credit Union, in a move to expand its nonbanking business portfolio.
The banking group, in a directors’ meeting held Monday, decided to acquire a 70% stake in the insurer for an estimated W70 billion won ($60 million), officials said January 21. Hana Financial was the only bidder.
Considering the relatively low selling price and the lack of competitors, Hana’s takeover of the insurer had long been the subject of speculation within the industry. The-K focuses largely on car insurance and also holds a license for long-term, non-life insurance operations.
Source: The Korea Herald
MALAYSIA
Pilgrimage fund Tabung Haji is expected to double last year’s 1.25% returns as economists believe the worst is over for the fund.
Bank Islam Malaysia chief economist Mohd Afzanizam Abdul Rashid said the fund has the ability to give better dividend for financial year of 2019 as a result of its asset surplus that stood at RM2.3 billion ($563.9 million) last year. The figure shows a two-fold increase of 2018’s RM1 billion surplus.
“TH [Tabung Haji] has the ability to give better dividend for fiscal year 2019. As to whether TH would be able to sustain its dividend payment going forward, it will be very much dependant on the prevailing market conditions,” Rashid said.
Source: The Malaysian Reserve
NEW ZEALAND
The New Zealand Super Fund made another investment in local hotels with New Zealand property company partners, buying Holiday Inn Rotorua.
In July 2019 the sovereign wealth fund announced it was co-investing in a $300 million hotel portfolio established by the Russell Group and Lockwood Property Group, creating a platform for further investment in New Zealand's tourism sector.
SINGAPORE
State investor Temasek and European alternatives asset manager EQT announced on January 22 that they had jointly set up Q2 Power, a $500 million renewable energy platform in India.
O2 Power will target more than four gigawatts (GWs) of installed capacity across solar and wind projects, comprising both greenfield projects, as well as mergers and acquisitions, the companies said in a joint statement.
“India presents significant investment opportunities being the second largest renewable energy market in the world and EQT is delighted about teaming up with Temasek and O2 Power," said Fabian Gröne, partner, EQT Partners, and investment advisor to EQT Infrastructure.
Source: Livemint
Temasek pledged to become carbon neutral by the end of the year and aims to halve the emission of its portfolio companies by 2030.
Environmental concerns are understood to be part of the reason it chose not to participate in oil company Saudi Aramco's initial public offering last year.
"We may have to be more aggressive," Temasek International chief executive Dilhan Pillay said in a Bloomberg Television interview on the sidelines of the World Economic Forum in Davos, Switzerland. "We are thinking about how we can expand a number of sustainability investments," he added.
Source: Straits Times
TAIWAN
Taiwan Life Insurance and Transglobe Life Insurance were approved by the Financial Supervisory Commission to invest NT$2.5 billion ($83.47 million) and NT$1.7 billion into two Taiwanese wind farms, making them the first insurers to invest in wind energy.
The two insurers and Danish wind energy developer Copenhagen Infrastructure Partners (CIP) have formed the Taiwan Wind Investment Company to invest into the wind farms. Taiwan Life and Transglobe Life owned a combined 12.5% stake in the new entity.
Source: Liberty Times Net