Insto roundup: HK Exchange Fund sees $11.1b loss; Trump eyes blocking FRTIB’s China investment

Australian super members withdraw $834 million; HK Exchange Fund loses $11.1 billion in the first quarter; UK pension pool seeks China equity managers; HSBC buys out China insurance JV; Indian state pensions see AUM rise in April; SWFs to coordinate efforts to combat economic slowdown, and more.
Insto roundup: HK Exchange Fund sees $11.1b loss; Trump eyes blocking FRTIB’s China investment


Australians withdrew A$1.3 billion ($833.9 million) of superannuation savings in just the first week of new early release rules to help those suffering financial hardship as a result of Covid-19. So far 107 pension funds have paid a total of 162,879 early release applications according to the Australian Prudential Regulation Authority (Apra), with the average withdrawal being A$8,002.

Trustees are meeting Apra's five-day deadline for payments too, with the average time for members to be paid after approval being just 1.6 business days.

Hostplus said it had received 84,613 claims under the ERS scheme as at close of business on April 24, worth A$603 million so far. UniSuper has received 7,250 requests and paid out about $55 million. And AustralianSuper, the largest superannuation pension fund in Australia, said it had received 85,000 requests, represented over A$60 million, as of April 28.

Source: Financial Standard, AustralianSuper

Superannuation fund Cbus has set aside an initial A$200 million ($128.26 million) to take advantage of recent share market falls to build equity stakes in “high-quality companies in good industries, who are good corporate citizens, said chief investment officer Kristian Fok. The fund has plans to invest an addition A$300 million after that.

Kristian Fok, Cbus

In addition to buying shares, the A$56 billion fund, which represents the construction industry, is lending to domestic companies across several industries, including infrastructure and commercial property, and revisiting lending opportunities it had previously knocked back, said Fok.

He added that later investments would likely include working with companies Cbus already knew. He flagged the possibility of ramping up investment in renewables through Western Australia-based Bright Energy Investments and said property development arm Cbus Property could offer a steady pipeline of jobs and projects, “subject to finding quality tenants”.

Source: The New Daily


HSBC Insurance has agreed to acquire the remaining 50% equity interest in its life insurance joint venture in China from The National Trust Limited.

The transaction follows the removal of foreign-ownership restrictions on foreign-funded life insurance companies in China as of January 1, 2020. Formed in 2009, HSBC Life China is based in Shanghai.

The deal comes as part of a push by HSBC chief executive Noel Quinn to boost the group’s performance by shifting investments and capital to Asia and restructuring the business.

Source: HSBC; Bloomberg


The Exchange Fund lost HK$86.1 billion ($11.1 billion) on investments in the first quarter as it fell victim to the worldwide stock market slump. The number is the biggest three-month loss the fund has suffered in the 16 years it has been reporting its quarterly performance.

The losses, which came mainly from overseas stock market investments, are in sharp contrast to a year ago when the fund reported its best first-quarter return, of HK$133.4 billion. It marks the first quarterly loss for the fund since the fourth quarter of 2018, when it lost HK$33.6 billion.

Source: South China Morning Post


India's National Pension System bucked the general asset downtrend triggered by the Covid-19 outbreak, by – along with the Atal Pension Yojana (the scheme for the informal and self-employed sector) – recording an increase in new enrolments and assets under management.

The two schemes said some 33,000 to 34,000 people had joined during the first three weeks of April. The total AUM has also seen a record rise of Rs120 billion ($1.59 billion).



The Government Pension Investment Fund hired Neuberger Berman's private equity arm, NB Alternatives Advisers, to manage its first private equity fund-of-funds allocation for an undisclosed amount.

The private equity mandate is for “global diversified” investments. The ¥169 trillion ($1.58 trillion) Tokyo-based pension fund has previously hired three fund-of-fund managers for infrastructure and two for real estate.

NB Alternatives Advisers will implement an alternative investments multi-manager strategy for this asset class through a fund of funds to pursue fund investments and co-investments, GPIF said in an announcement on April 30.

Source: GPIF

Japanese life insurance companies have been snapping up Australian government bonds, easing pressure on the Reserve Bank of Australia as it tries to keep borrowing costs low while the coronavirus crisis plays out.

Fiona Trigona, the head of funding for New South Wales government debt manager TCorp, said Japanese life insurers were critical supporters of its record A$10 billion sales of government bonds over four weeks, with the insurers having begun buying long-dated bonds after the Australian dollar depreciated through March.

“Japanese investors, especially the life companies, have been buying in tenors greater than 10 years," Trigona said. "They buy longer bonds to match their long-term liabilities.” As of May 4, Australian 10-year bonds were trading 0.87%, down from 1.4% in mid-March, but US 10-year bonds were trading even lower, at 0.63%.

Source: Australian Financial Review

Several major Japanese life insurers intend to mainly invest in highly rated foreign corporate bonds over the coming year, based on an assumption that the global economy will start recovering in the second half of this year or later as the spread of Covid-19 slows.

Nippon Life Insurance, Sumitomo Life Insurance and Japan Post Insurance are slated to expand foreign bond investment. Meiji Yasuda Life Insurance, meanwhile, plans to adjust fund allocation based on interest rate and foreign exchange rate movements, and said it would add to corporate bond investments to a certain extent, while carefully examining earnings and credit ratings of potential target firms.

In addition, Nippon Life, Sumitomo Life and Dai-ichi Life Holdings said they intended to invest more in Japanese bonds while domestic interest rates were remained low.



The National Pension Service (NPS) has posted a negative return for the first two months of this year as the coronavirus pandemic pummelled shares at home and abroad, its operator said on April 29.

The state fund registered a preliminary return rate of minus 0.45% as of the end of February. It represents a sharp turnaround from a record yield of 11.3% last year. NPS didn't provide the amount of its valuation loss, but blamed it on slumping domestic and overseas stock markets.

Source: Yonhap News Agency

Korea Post’s insurance arm plans to select two global private equity funds to invest up to $200 million in private equity secondary markets in 2020, according to a request for proposal on April 27.

The largest pension fund in Korea said it would consider funds that manage a minimum $1 billion in a closed-end commingled fund. The general partner firms must have a track record of secondary commingled fund management from before the 2008 global financial crisis.

Qualified private equity funds also need to enter into a distribution agreement with a registered Korean distributor for the funds when they submit a proposal. Korea Post will accept proposals for the mandate until 13:00 (Seoul time) on May 8 and finalise the selection by the end of June.

Source: Korean Investors

A unit of China's Anbang Insurance Group unit has sued in a US court to force South Korea’s Mirae Asset Global Investments to complete its $5.8 billion purchase of the Strategic Hotels & Resorts portfolio of US luxury hotels.
In a public summary of the lawsuit filed under seal in Delaware on April 27, officials of the Anbang unit said it “seeks an order forcing defendants to specifically perform their obligations under a sale and purchase agreement and certain equity commitment letters.”
The deal, in which Mirae placed a 10% deposit in September 2019, was slated to close on April 17, people familiar with the matter said. They added that the Anbang unit has alleged that Mirae was suffering from buyer’s remorse because of hotel closures caused by the coronavirus pandemic and that it had been unable to secure favourable terms for financing.


Both general and life insurers in Malaysia look set for a rough ride in the coming months thanks to global economic repercussions from the Covid-19 pandemic, said Zakri Khir, Allianz Malaysia's chief executive.

He said the insurance industry was facing twin setbacks of sharp decline in crude oil prices and demand and supply uncertainty, making it difficult for the industry and Allianz Malaysia to be optimistic or make a prognosis for now.

Source: New Straits Times


Impossible Foods, maker of the soya-based burger, has been in talks with investors about raising more funds after receiving excess demand for a $500 million funding round in March, according to people familiar with the matter.

The firm has held initial talks with potential investors including some Chinese funds, said the people. Existing investors including Singapore's Temasek Holdings and Horizon Ventures.

Source: The Straits Times


Eight Taiwan insurers have subscribed nearly half of a $5 billion Israeli sovereign bond issue listed dually in Taiwan and London.

Cathay Life, Nanshan Life, Chunghwa Post, Taiwan Life, Fubon Life, Farglory Life, Transglobe Life and Yuanta Life have together subscribed nearly $2.5 billion of the 40-year bond that has a 3.8% coupon.

Formosa bonds, or Taiwan-listed bonds issued by foreign entities, have seen large redemptions of over NT$680 billion in this year as interest rates are going down, a lot of insurers are now looking for new investment opportunities to maintain their allocations in bonds.

Source: Commercial Times


Prudential Corporation Asia (PCA) appointed Robin Spencer as chief executive of Prudential Life Assurance Thailand, succeeding Aman Chowla.

Spencer reports to Wilf Blackburn, PCA's regional chief executive for insurance growth markets, who in turn reports to Nic Nicandrou, chief executive of PCA, the company’s statement on April 29 said. Spencer had joined PCA as chief operating officer in 2018.

Source: Prudential Corporation Asia, Insurance Business Asia


FWD Vietnam Life Insurance received the approval of the Ministry of Finance to increase its charter capital to Vnd13.91 trillion ($593 million) from Vnd3.68 trillion ($157.9 million). This increase makes the life insurer the largest in Vietnam by charter capital.

Source: Asia Insurance Review


The chief executives of sovereign wealth funds including China Investment Corporation, Singapore’s GIC and Korea Investment Corporation (KIC) joined leading financial institutions in agreeing to expand cooperation to help the global economy recover from the coronavirus outbreak.

The SWFs held a video conference on April 27 at the request of the Russian Direct Investment Fund. KIC chief executive Choi Heenam said his organisation “presented the examples of the South Korean government’s successful handling [of the coronavirus]” and said the participating investment institutions agreed to cooperate more “in various aspects” to help the global economy recover. KIC did not specify what these aspects would be.

Other participants included Singapore’s Temasek, Abu Dhabi state investor Mubadala, Saudi Arabia’s Public Investment Fund, the International Development Finance Corporation, French investment bank Bpifrance and Japan Bank for International Cooperation.

Source: Korean Investors

Border to Coast Pension Partnership, one of the UK’s local authority retirement fund pools, is seeking up to two China equity managers to run its first dedicated China portfolio.

The mandate(s) will account for 30-40% of Border to Coast’s £800 to £900 million ($981 million to $1.1 billion) emerging market equity portfolio, it announced on April 28. The submission deadline is around May 25, and the pool plans to appoint the managers in the third quarter of 2020.

Source: Border to Coast Pension Partnership

Trump: Targeting China

President Donald Trump is exploring blocking the US federal retirement savings fund from investing in Chinese equities considered a national security risk, a person familiar with the internal deliberations said. The action would possibly come in the form of an executive order, the person added.

The Thrift Savings Plan, overseen by the Federal Retirement Thrift Investment Board (FRTIB), is scheduled to transfer roughly $50 billion of its international fund to mirror an MSCI All Country World Index, which captures emerging markets, including China.

FRTIB made a decision in 2017 that the money should be moved by mid-2020. Opponents of the transfer have in recent weeks engaged in a last-minute effort to stop it, following other attempts to do so in the past year.

Source: Bloomberg

International investor groups, including the Asia Investor Group on Climate Change (AIGCC), have encouraged governments to ensure they are planning for a sustainable recovery from the Covid-19 pandemic by factoring climate change risk into economic recovery plans.

The global statement, which has been sent to G20 countries and others, said governments should prioritise net zero emissions projects in areas like infrastructure, transport, property and energy.

AIGCC’s members include AustralianSuper, Canadian pension funds CDPQ and OPTrust, Taiwan’s Cathay Financial Holdings and the International Finance Corporation, the private-sector arm of the World Bank.

Source: AIGCC

APG Asset Management, the National Pension Service of Korea and Swiss Life Asset Managers have formed a consortium to buy a 81.1% majority ownership stake in Brisa – Auto-Estradas de Portugal, a listed Portuguese toll road operator with a network of 17 motorways and six national highways. 

The transaction values the equity of Brisa at more than €3 billion ($3.26 billion). The sellers are José de Mello – Investimentos and Arcus European Infrastructure Fund 1 (managed by Arcus European Investment Manager). José de Mello will remain a shareholder, with 17% of its voting rights.

Source: Sovereign Wealth Fund Institute

The 100 biggest defined benefit pension plans in the US posted an average return of 17.3% last year, but their funded ratio rose only 0.4 percentage points to 87.5% because of soaring liability values, consultancy Milliman reported.

The funds reached an all-time high of $1.62 trillion in assets but their pension benefit obligations also rose to an all-time high, of $1.85 trillion. That is because the average discount rate ­– the interest rate used to determine the present value of future cash flows – fell 94 basis points to 3.06%, its largest one-year drop in the history of the Milliman study.

The report said plan sponsors would need to consider whether to rebalance or shift asset allocations in light of the falling equity values, rising fixed income prices, and changing capital market assumptions so far in 2020.

Source: Milliman

Canadian defined-benefit pension plans saw their sharpest quarterly decline since 2008 amid the Covid-19 pandemic, as both the RBC Investor & Treasury Services All Plan Universe and the Northern Trust Canada Universe posted losses of 7.1% during the first quarter of 2020.

However, the drop was “a modest decline in light of the unprecedented condition”, Katie Pries, Northern Trust’s Canada chief executive, said in a statement.

Because the Canadian dollar weakened against the US dollar during the quarter, plans with unhedged exposure to non-Canadian equities were somewhat sheltered from local currency losses, according to RBC.

Source: Chief Investment Officer

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