Insto roundup: GPIF eyes emerging infra; Indonesia to merge four insurers

Indonesia consolidates four insurers in scandal-ridden sector; Japan's GPIF asks EM infrastructure funds of funds to offer information and sets up index posting system; Ping An warns of Covid-19 impact on investments; Korea's parliament mulls raising insurers' foreign investment limit; CPPIB, APG and China's ESR agree to set up $1 billion JV for Korean logistics investing, and more.
Insto roundup: GPIF eyes emerging infra; Indonesia to merge four insurers


The A$12 billion ($7.75 billion) LGIA Super fund revised down the value of its property and infrastructure in response to Covid-19, joining AustralianSuper, UniSuper and Hostplus.

LGIA Super reduced the valuation of its property portfolio by 5% and infrastructure portfolio by 3%. The changes translate to a -1% reduction in returns for both MySuper and diversified growth option members and a -4% fall in returns for property option members, the fund estimated.

The new valuations were applied to portfolios on April 21. Superannuation funds have had to revalue their unlisted investments outside of quarterly reports due to market volatility. In March, AustralianSuper cut the value of its unlisted assets to 7.5% on average, shaving off 2.2% in returns from its $126 billion balanced option.

Source: Financial Standard


Ping An Insurance said its investment portfolio grew by 5.3% in the first quarter of 2020 to Rmb3.38 trillion ($477 billion), but warned that, as result of Covid-19, its investment income would decline significantly, credit risks would increase and the demand for financing would decrease.

In the first quarter the investment portfolio of insurance funds achieved an annualised net investment yield of 3.6% and an annualised total investment yield of 3.4%, it added.

Source: Ping An

Ping An Insurance is the first Chinese company to become a signatory of the Principles for Sustainable Insurance (PSI), a global sustainability framework of United Nations Environment Programme Finance Initiative.

The PSI was launched in 2012 and serves as a global practice framework for the insurance industry to address environmental, social and governance (ESG) risks and opportunities. PSI is part of the insurance industry criteria of the Dow Jones Sustainability Indexes and FTSE4Good Index.

Source: Ping An


Hong Kong's Exchange Fund will inevitably record a loss in the first quarter given the sharp correction in the global equity markets, said Howard Lee, chief executive of the Exchange Fund investment office at the Hong Kong Monetary Authority.

Amid the sudden outbreak of the coronavirus and the sharp volatility in financial markets, many institutional and retail investors recorded double-digit loss in terms of return in the first quarter, Lee said.

Most conservative mixed asset funds under the Mandatory Provident Fund system, in spite of having a smaller share of equity holdings, also recorded a near 6% loss.

Source: Financial Standard


The amount of funds in India’s National Pension System (NPS) is forecast to grow by 35% in the fiscal year ending March 31, 2021 despite widespread economic concerns brought on by the Covid-19 pandemic, according to a top pension fund official.

The overall NPS fund balance increased by around 30% to Rp4.17 trillion ($54 billion) in the year to March 31, 2020. That was slower than the 35% to 36% rate expected, because of the virus outbreak, Supratim Bandyopadhyay, chairman of the Pension Fund Regulatory and Development Authority, said in an interview with information provider Cogencis.

The pandemic aside, he added, a lot of corporates, especially public-sector units that already have their own superannuation funds, had decided to shift to the NPS.

Source: Asia Insurance Review


Indonesia's consolidation of four state-owned insurers under one holding entity is aimed to prop up an industry rocked by mismanagement scandals.

Bahana Pembinaan Usaha Indonesia, a financial group fully owned by the government, has been made the parent of four state insurers with a combined Rp 60 trillion ($3.6 billion) in assets, under a decree signed by President Joko Widodo last month.

The four companies include Jasa Raharja, travel accident insurance; Jasindo, general insurance; Askrindo, financial and general insurance; and Jamkrindo, credit insurance for trade and business.

Source: Nikkei Asian Review


The Government Pension Investment Fund (GPIF) issued a request for information to fund of fund managers that focus on emerging market infrastracture on Monday (April 27). 

The pension fund said that it "expects to receive useful information from managers in the relevant market in order to develop an idea of potential investment in the emerging markets going forward". This is part of its "global core-focused infrastructure investment strategy, for portfolio diversification". It didn't stipulate how much it could seek to invest in this new area. 

The period of acceptance of the RFIs would be from April 27 to June 12. GPIF said it would accept information on investment schemes other than fund of funds "if deemed appropriate".  

Source: GPIF

GPIF had earlier launched its own cloud-based data and analytics portal to track and select indexes and support its own passive strategies, the pension fund said on April 23. 

The data platform, named the Index Data Entry and Analysis System (Ideas), will aggregate environmental, social, and governance (ESG), financial, and non-financial data poured into the system, which collects information from index providers. GPIF hired data provider FactSet to power information in the system. 

“GPIF is taking an extremely advanced approach to improving index selection that will drive results for asset owners,” Yumi Tanaka, regional director of FactSet Japan, said in a statement.

Source: GPIFChief Investment Officer


Korean insurers are keeping their eyes on whether the National Assembly will pass a bill to raise the upper limit on insurers' overseas investment volume, as the growth of the domestic insurance industry is slowing down due to persistent low interest rates in the country.

According to local insurance law, insurers' foreign investment volume should not exceed 30% of their total operating assets. But the ruling Democratic Party of Korea is pushing for a law revision under which the party is seeking to raise the cap to 50%.

Life insurers want the assembly to pass the bill as the industry loses steam for its expansion amid the prolonged low interest rate and weak economic growth. Most life insurers are seeking to invest more overseas markets to access higher returns and make up for losses in the domestic territory. At the end of January, Hanwha Life Insurance's had 28.9% of its operating assets in foreign securities.

Source: Korea Times

Insurance companies in South Korea saw their risk-based capital ratio fall in the fourth quarter of last year, according to new data from the Financial Supervisory Service (FSS) on Monday (April 27).

The risk-based capital (RBC) ratio – the actual solvency capital divided by the minimum solvency capital required – of insurance firms stood at 269.5% at the end of December, down 17.4 percentage points from three months earlier. Insurers have to keep their RBC ratios above the regulatory standard of 100%, the FSS said.

The FSS said it will encourage insurance companies to preemptively improve their financial stability by expanding capital and strengthening the crisis situation analysis in case there are concerns over the falling RBC ratio. Insurance firms in South Korea are required to gradually increase their capital reserves to better cope with tougher global accounting standards that will assess assets on a mark-to-market basis from 2022.

Source: Korea Herald

The state-run National Pension Service could lose up to W25 trillion ($20.3 billion) from its investments in the South Korean stock market this year, local reports said on April 23.

An asset management report compiled in late January showed that the maximum amount of potential losses of the overall financial assets stood at W40.8 trillion as of late January, which amounts to 53.6% of a limit of W76.2 trillion. The figure increased by W300 billion from late November. The estimates have a confidence level of 95%.

By breakdown, the world’s third-largest pension fund with more than W700 trillion in assets held 25.6 trillion won worth of shares faced with risks of principal loss, up W5.7 trillion from W19.8 trillion in late November. It was estimated to possibly lose up to W20.3 trillion of foreign shares, down from 23.7% during the same period.

Source: The Korea Herald


Khazanah Nasional has trimmed its holdings in the utility company Tenaga Nasional last week by selling 74 million shares or 1.3% in the firm.

It has put the stock under pressure as it has been in the red since trading resumed on April 27. It declined to RM12.08 ($2.77) after shedding eight sen since the opening with 2.92 million shares transacted.

Khazanah disposed of 1.3% of its stake, but the firm remains its largest shareholder.

Source: The Edge Markets, The Star

The Employees Provident Fund (EPF) has launched the Employer Covid-19 Assistance Programme (e-CAP) to support small and medium enterprises (SMEs) affected by the Covid-19 global pandemic.

The fund said e-CAP allows eligible SMEs the flexibility to choose to apply for a deferment and restructuring of the employer's share of EPF contributions for April, May and/or June this year.

Source: The Edge Markets


Data centrer firm Equinix said on April 21 that it signed a joint venture worth more than $1 billion with Singapore sovereign wealth fund GIC to build three data centres in Japan for the cloud computing market.

Under the deal, Singapore’s GIC Private will own an 80% equity interest in the joint venture, while Equinix will own the remaining 20% but run the operations. The joint venture is expected to close in the second half of 2020.

Source: Reuters

GIC increased its stakes in Bandhan Bank through its affiliate Caladium Investment. As of 31 March 2020, Caladium Investment owned over 72.29 million shares in the Kolkata-based lender.

The GIC-backed firm has accumulated more than 17 million shares between January and March 2020, through secondary market operations.

Source: Verdict

Plant-based meat and seafood maker Growthwell said on April 27 it had raised $8 million in a funding round led by Singapore state investor Temasek.

Other investors in the round included DSG Consumer Partners, Insignia Ventures, Genesis Ventures, Brandify and Koh Boon Hwee, the company said in a statement.

Source: Deal Street Asia


Moody’s Investors Service changed the outlook of Cathay Life and Fubon Life in Taiwan to negative from stable, but reaffirming their ratings. The change in their outlooks reflects the fact a prolonged low interest rate environment could crimp the investment income on which both insurers heavily rely for protfitability.

Both insurers have sizable allocations to US dollar-denominated bonds and the recent rate cuts by the US will add pressure on their bond investment yield, said Moody's. They will have to reinvest their matured bonds at lower yields amid reinvestment needs from their international bond holdings.

In addition, Cathay Life's and Fubon Life's capitalisation is vulnerable to equity market movements because of their relatively high holdings of equity investments. The current volatility in the capital markets would put pressure on their capitalisation.

Source: Moody's


Vietnam’s State Capital Investment Corporation agreed to sell its 1.14 million shares in the Thanh Hoa Industrial Zone Infrastructure Investment Joint Stock Company (TIIDC) for a price of around VND1.4 billion ($59,721).

This is equal to 45.72% of TIIDC’s charter capital, the shares will be auctioned at a starting price of VND45,300 ($1.93) each on the Hanoi Stock Exchange.

Source: Sovereign Wealth Fund Institute


Canada Pension Plan Investment Board, the Netherlands’ APG and China’s logistics property developer ESR agreed to set up a $1 billion joint venture to invest in logistics facilities in South Korea, which are in higher demand with the rapid growth of the e-commerce industry.

CPPIB, APG and ESR will inject $450 million, $350 million and $200 million respectively into the venture, they said in a joint statement on April 23. They may make an additional commitment later on to double its equity capital to $2 billion.

The venture, dubbed ESR-KS II, is their second venture formed to invest in South Korea’s logistics facilities, following a $1 billion platform that was later upsized to $1.15 billion and has developed 17 projects in the country.

Source: Korea Investors

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