Insto roundup: GIC to invest in Indonesia SWF; Investors scared by Korean short-selling ban
Asia pension systems are facing long term sustainability problems, with the pension age in many markets not reflecting gains in life expectancy over the last decade, according to the Allianz Pension Report: Asia Special 2021, published on January 28.
Although some markets are discussing an increase in the retirement age, the planned changes might not be sufficient to offset the expected increases in further life expectancy, said the report.
It added that Cambodia’s pension system covered just 3% of its working population, while at the other end of the scale Japan’s pension system covered 100% of the working population.
Source: Allianz Group
Future Fund reported a 1.7% return for the year 2020 as its funds under management grew to A$218 billion ($167 billion) from A$212 billion last year.
The sovereign wealth fund released its portfolio update for 2020, where it stated that negative returns from the impact of Covid-19 pandemic have fully recovered thanks to a strong performance in the second half of the calendar year.
The sovereign wealth fund's recorded return is well down on the 14.3% in 2019, while its 10-year return fell to 9% as of December, down from 9.9% the year before.
Source: Future Fund
Superannuation funds need to set clearer decarbonisation targets and be more transparent with companies before divestment, said a report by the Australasian Centre for Corporate Responsibility (ACCR).
The paper, 'Cutting Carbon: What the rush to divest fossil fuels means for emissions reduction and engagement', found that some institutional investors had actively recommended divestment from distressed sectors in the coal, oil and gas industries.
The advocacy organisation is instead pushing for investors to engage more actively with companies before divesting and to be prepared to allocate capital to climate solutions.
Growth funds run by top superannuation providers, including Australian Super, UniSuper, and Australian Ethical Super, outperformed the market in the year 2020.
Research house Chant West found that growth funds had a median of 3.6% returns, and some supers’ growth funds had posted returns of up to 9%.
The figures reflects the resilience of growth strategies, the research house said, while Australian Ethical Super’s chief investment officer David Macri said he did not believe the equities market was overvalued and that they were not expecting a massive correction.
Germany's Allianz Group has established China’s first insurance asset management firm that is 100%-foreign owned.
The new investment unit, Allianz Insurance Asset Management, will be established by Allianz (China) Insurance Holdings, the group's wholly-owned insurance subsidiary. The Shanghai-based firm officially opened on January 16, with an initial capital of Rmb1.2 billion.
Source: Allianz Group
Ping An Insurance and two other state-owned companies based in Shenzhen will form a consortium to participate in the debt restructuring of troubled technology conglomerate Peking University Founder Group Corporation, exchange filings showed.
Founder Group is a major Chinese technology conglomerate that deals with information technology, pharmaceuticals, real estate, finance, and commodities trading.
Ping An joined the consortium to be involved in the medical and healthcare ecosystem and build future growth engines, added the filings.
Source: Ping An Insurance
Hong Kong Exchange Fund saw its investment income shrink 24.56% year-on-year to HK$197.8 billion ($25.3 billion) in 2020. The income represents an annual investment return of 4.4%, according to a Hong Kong Monetary Authority (HKMA) statement on January 27.
Gains on bonds stood at HK$92.5 billion and gains on Hong Kong equities at HK$4 billion.
On February 1, the head of HKMA rejected lawmakers’ call to dip into the HK$4.5 trillion Exchange Fund to finance the government’s rescue packages for companies and individuals hard hit by Covid-19, saying such a move would hurt the fund’s ability to defend the local currency.
Source: Hong Kong Monetary Authority; South China Morning Post
India is planning to raise limits on how much overseas companies can invest in the country’s insurance industry, allowing foreign majority control, a move that could attract inflows from US and European insurers.
Finance minister Nirmala Sitharaman in her budget speech for 2021-22 on February 1 said the government would allow foreign direct investment of up to 74% in insurance entities, up from 49% currently.
The change could attract investments from international insurance companies, industry sources said, many of which have joint-venture operations in India, including from the US’s AIG and the UK’s Prudential.
The Indonesian government has appointed members to its new sovereign wealth fund’s supervisory board and named Singaporean sovereign wealth fund GIC among the foreign institutions committing capital to the fund.
Besides the ministers for finance and state-owned enterprises will sit Indonesia Permata Bank commissioner Haryanto Sahari; chairman of private equity firm Creador and former Indonesia stock exchange chief Darwin Cyril Noerhadi and lawyer Yozua Makes.
Indonesia also reiterated commitments from foreign institutional investors, adding GIC and Australian investment bank Macquarie to the list of those that had so far committed a total of $10 billion.
Sources: DealStreetAsia, CNA
The Government Pension Investment Fund (GPIF) has appointed Hamilton Lane as the investment manager for its global diversified private equity mandate, and Mitsubishi UFJ Trust and Banking Corporation as the gatekeeper.
The manager is required to implement a multi-manager strategy for this asset class through a fund-of-funds structure to pursue fund investments and co-investments. The request for proposal for the mandate was originally launched in April 2017.
The Construction Workers’ Mutual Aid Association (CWMAA) is looking to hire two local fund managers for a W20 billion ($18.2 million) domestic venture capital and private equity mandate.
The investment period is between four and five years, the group said in its request for proposal published on the website of the Korea Financial Investment Association on January 25. Applicants must have a five-year track record in private equity investments and at least W50 billion of strategies in the asset class.
Applications are open until February 5, and evaluation and manager selection are scheduled from early March to mid-April.
Source: Asia Asset Management
South Korean politicians are pressuring financial regulators to extend a ban on short selling in a bid to win the votes of retail investors. But the ban has left international investors unable to hedge their exposure to South Korean stocks, forcing some to exit the market completely.
Since the ban was imposed in March last year, global investors have sold a net W18.3 trillion, according to official data. It has meant some institutional investors are more reluctant to hold South Korean stocks, said Stuart Jones, chairman of the Pan Asia Securities Lending Association.
The growing official animus in South Korea against short sellers reflects the emerging power of retail investors. A group of amateur traders on Reddit forced huge losses on hedge funds in the US betting against gaming retail chain GameStop.
Source: Financial Times
The chief executive of Malaysia’s Employees Provident Fund referred to environmental, social and governance (ESG) investing as “the “vaccine for any crises” and said the country's largest pension pot would aim to make all of its investments based on ESG practices by 2030.
Alizakri Alias told Bloomberg TV that ESG-compliant assets were found to be more resilient than others, even at the height of the Covid-19 pandemic. “From a market perspective, it actually brought a lot of certainty or normalcy in a very volatile market,” he said.
He disclosed that EPF's ESG assets provided long-term returns of 5% to 7%.
Malaysian sovereign wealth fund Khazanah Nasional led a $88 million funding round for Chinese diagnostic lab company Adicon Holdings. Lake Bleu Capital, Cenova Capital, OrbiMed and Mirae Asset also participated.
Hangzhou-based Adicon owns and operates 24 diagnostics laboratories across China and is said to be planning an IPO. US alternative investment firm Carlyle backed the company in 2018 and is Adicon’s biggest single shareholder.
Source: Business Times
Singapore sovereign wealth funds GIC and Temasek became cornerstone investors in Kuaishou Technology’s $5.4 billion IPO. Kuaishou, whose popular video service rivals TikTok, sold 365 million shares at HK$115 ($14.83) each and is now valued at $60.9 billion.
The deal represents the world's biggest internet listing since cab-hailing firm Uber’s $8.1 billion IPO in May 2019 and Asia’s largest IPO since Budweiser Apac raised $5.8 billion in September 2019. Kuaishou’s shares are due to start trading in Hong Kong on February 5.
GIC, Temasek, Abu Dhabi Investment Authority, Capital Group and BlackRock are among 10 cornerstone investors. Kuaishou is backed by Tencent, which is also an investor in TikTok parent ByteDance.
GIC participated in Nubank’s latest fundraise for $400 million, which brings the Brazilian fintech firm's total valuation to $25 billion. This makes it one of the continent’s largest financial startups by market capitalisation.
Investment management firms Whale Rock and Invesco also participated alongside existing backers such as Tencent.
Nubank’s founder said the new investment would be used to expand operations in Brazil, Mexico and Colombia, as well as launch new services.
SGX and Temasek’s new digital assets joint venture acquired a minority stake fixed income issuance and data firm Covalent.
The JV, Marketnode, was announced on January 22 and aims to advance digital asset infrastructure and boost efficiency in capital markets. Marketnode will work with Covalant to streamline bond market cycle activities.
Lim Cheng Khai, director of financial markets development at the Monetary Authority of Singapore, said the central bank and regulator welcomed the partnership. “Digitalisation and automation will lead to higher level of efficiencies, market transparency and information availability for all industry participants, including banks, investors and issuers,” he said.
Source: Business Times
An affiliate of Singapore sovereign wealth fund GIC is to acquire a 19.9% minority stake in Duke Energy Indiana for $2.05 billion.
With an 80.1% stake, North Carolina-based parent company Duke Energy remains the majority shareholder and sole operator of the Indiana unit. As part of the deal, GIC will invest in a newly formed intermediate holding company and receive certain limited rights.
Duke Energy said the deal would allow it to forgo a previously announced $1 billion planned equity raise and advance its $60 billion clean energy transition plan. The company aims to cut its carbon emissions in half by 2030 and become net-zero by 2050.
Source: SWFI, BloombergQuint
German development finance institution Deutsche Investitions-und Entwicklungsgesellschaft (DEG) joined Temasek and other institutional investors in backing Singaporean venture capital firm Openspace Ventures’ latest fund.
DEG committed $22 million to the vehicle, which is Openspace’s third and is aiming to close at $200 million. The VC manager focuses on investments in early-stage (series A and B) technology companies based in Southeast Asia. Its existing portfolio includes the likes of Indonesian ride-hailing unicorn Go-Jek and booking app Chope, as well as healthtech firms Halodoc and Biofourmis. This is Openspace’s third vehicle.
Openspace’s list of institutional investor clients include pension funds, university endowments, insurance companies and family offices across the US, Europe and Asia Pacific.
Taiwan’s Labor Funds recorded a combined earn of NT$316.44 billion in 2020, representing a 7.25% year-on-year growth.
The Labor Funds had NT$4.567 trillion in assets under management at the end of December.
Source: Bureau of Labor Funds
Danish retirement funds PKA Pension and PFA Pension are being criticised for holding investments in companies that own a Chinese gold mine where 22 miners have been trapped underground since January 10 after an explosion.
The gold producer, Zhaojin Mining, initially kept quiet about the explosion at the Hushan mine, near Qixia in Shandong province, thereby delaying a rescue mission by at least 30 hours, according to investigative research firm Danwatch. The explosion raises further questions over safety standards in China’s mining industry and whether they are overlooked in the pursuit of profits, said Danwatch.
PKA has invested in Zhaojin Mining and PFA Pension owns shares in Fosun International, a Chinese conglomerate that holds a stake in the mining company. The two funds are among several that have invested into the co-owners of the Hushan mine.
The head of Norway’s sovereign wealth fund warned recent stock market exuberance cannot “go on forever”, after it drove a 10.9% gain for his institution’s investment portfolio in 2020.
Nicolai Tangen, head of the $1.3 trillion oil fund, said “I’m always worried – that’s my middle name” when asked if he was concerned about the possibility of a stock market bubble.
The recent market rally has largely been caused by stimulus measures by central banks and governments, said Tangen, who took over in September as chief executive of Norges Bank Investment Management, which manages the fund.
Source: Financial Times
Norway’s sovereign wealth fund sold its entire portfolio of companies focused on oil exploration and production, marking a major step away from fossil fuels for the investing giant.
The portfolio, worth about $6 billion in 2019, was fully exited by the end of last year, Trond Grande, the fund’s deputy CEO, said on January 28. The move completes a years-long process to reduce the giant investor’s exposure to a sector that has defined Norway’s economy for the better part of half a century.
Source: Financial Times