Insto roundup: Japanese insurers eye local debt; Kwap gains new CEO
Four in 10 pension funds in Asia and Europe have committed to achieving net zero carbon emissions across their portfolios by 2050, but only half that proportion in North America have done the same, according to new research.
This was among the findings of a survey by Aviva Investors that underlines the need to accelerate the fight against climate change in the world’s largest pensions market.
The UK-based asset manager had polled 535 pension funds and 532 insurance firms from 34 countries with combined assets of at least €2 trillion to assess how sentiment among institutional investors was shifting during the coronavirus pandemic.
Source: Financial Times
Gary Gabriel has left his role as chief investment officer of State Super to become head of portfolio management at Victoria Funds Management Corporation.
He will lead the group responsible for portfolio strategy and asset allocation, investment risk and implementing client portfolios at VFMC, reporting to chief investment officer Russell Clarke.
New South Wales's A$43 billion ($30 billion) State Super acts as the trustee for the State Authorities Superannuation Scheme, State Superannuation Scheme and Police Superannuation Scheme.
A 25-year-old man from Brisbane successfully sued Rest, one of Australia's biggest superannuation funds over its handling of climate change, forcing it to commit to net-zero emissions for its investments by 2050.
Mark McVeigh launched a lawsuit against Rest in the Federal Court in 2018 after it failed to provide him with information on how it was managing the risks of climate change. He alleged Rest had breached the Superannuation Industry Act and the Corporations Act by failing to manage those risks, which could include fossil fuel companies plummeting in value or infrastructure being damaged by extreme weather.
In an 11th-hour settlement reached on Monday (November 2) while the case was adjourned, Rest agreed its trustees have a duty to manage the financial risks of climate change.
In a letter circulated on October 29, the investor group which included Hesta, Cbus, the Church of England Pensions Board and California State Teachers' Retirement System, said their long-term investments meant they needed to have confidence in how miners obtained and maintained their "social licence" with the traditional custodians of their land on which they operated.
The push comes after investors shocked and outraged at Rio Tinto's ill-fated decision to blast through two culturally significant 46,000-year-old rock shelters at Western Australia's Juukan Gorge to enlarge an iron ore mine. Several of Australia's largest superannuation funds demanded greater accountability for the disaster and eventually forced the resignations of Rio's chief executive Jean-Sebastian Jacques and two of his deputies last month.
Source: Sydney Morning Herald
The Hong Kong Monetary Authority announced last Friday (October 30) that the total assets of the Exchange Fund amounted to HK$4.19 trillion ($540 billion) as of September 30, HK$26 billion ($3.35 billion) higher than that at the end of August.
It posted an investment income of HK$52.8 billion ($6.81 billion) in the third quarter, a drop of 56.6% from the previous quarter.
Over the January to September period, the Exchange Fund's investment income amounted to HK$62.4 billion, compared with HK$201.9 billion ($26 billion) in the same period a year ago.
Source: Hong Kong Monetary Authority
Meiji Yasuda Life is among the Japanese life insurers beginning to invest more into the domestic bond market after many years of forays into foreign debt, with the yield gap between them having shrunk following the Covid-19 pandemic.
“We have long been investing primarily in US dollar bonds but now that their yields have fallen to so low, we are not in a position to buy them aggressively anymore,” said Koichi Nakano, general manager for investment planning at Meiji Yasuda Life.
Many Japanese insurers plan to increase their holdings of domestic fixed income assets while reducing those of foreign debt in the second half of the current financial year to March. Foreign bonds have been a major source of income for Japanese institutional investors who had been deprived of interest income at home due to the Bank of Japan’s hyper-easy monetary policy.
The number of Japanese corporate pension funds with global bonds in policy asset mixes (PAM) increased by 10.7 points to 25% from 2018 to 2020, while global equities increased by 8.5 points to 21.1% during the same period.
This was the result of the survey conducted by AL-IN, a Japanese publication for institutional investors that periodically surveyed Japanese corporate pension funds. Data was collected from 136 respondents.
The study also shows that multi-asset strategies now account for 27.3% of PAM and 34.4% of portfolios, suggesting such strategies have acquired a certain status among domestic pension funds.
Source: Institutional Investor
National Pension Service (NPS) will oppose LG Chem’s plan to separate its battery business into a new company, citing concerns about damage to shareholder value.
LG Chem, an electric car battery supplier for Tesla and General Motors, said last month it plans to separate the business as the electric vehicle market takes off. The company stated that it very much regrets NPS's opposition to the plan when most domestic and foreign proxy advisers including Institutional Shareholder Services back it, adding it will actively communicate with shareholders.
NPS, the world’s third-largest pension fund with W777 trillion ($689.31 billion) in assets, was the second-largest shareholder of LG Chem with a 9.96% stake as of end-June.
Malaysian state pension fund Kwap has promoted Nik Amlizan Mohamed to new chief executive from chief investment officer, effective Monday (November 2), as had been much anticipated.
She replaces Hamadah Othman, whose two-year tenure ended on October 31.
Source: Kwap; Free Malaysia Today
Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund are each investing INR37.8 billion ($507.2 million) in buying units of Digital Fibre Infrastructure Trust, part of Indian conglomerate Reliance Industries.
The latest infusion from the two sovereign wealth funds underscores the confidence of marquee investors in Reliance owner Mukesh Ambani’s plans to transform the group into a retail and technology behemoth and pivot away from its staple oil-refining business that he inherited after his father died in 2002. He has already secured over $25 billion in investment from backers such as Facebook and Google.
Sovereign wealth fund GIC added a portfolio of 33 German retail logistics assets to its European warehouse platform P3 Logistic Parks. It invested an undisclosed sum to buy the 650,000sqm Matrix portfolio, which includes assets in urban locations in cities and towns, including Berlin, Dortmund, Nuremburg, Hamburg, Hanover, Cologne, Dresden and Leipzig.
Singapore’s GIC acquired P3 for €2.4 billion in 2016 with a plan to scale up the platform. Late last year, GIC added the Maximus portfolio, a €950 million pan-European logistics real estate portfolio of 28 assets it acquired from Apollo Global Management.
Source: IPE Real Estate
INTERNATIONAL (EXCLUDING ASIA)
Canada’s Oxford Properties Group, the real estate investment and development arm of Ontario Municipal Employees’ Retirement System, has acquired a 50% interest in Australia’s Investa Office Management Holdings (IOMH) from Mira Real Estate, part of Macquarie Group.
The other 50% of IOMH is owned by Investa Commercial Property Fund Holdings, which is attached to Investa Commercial Property Fund, a core prime office fund focused on Australian prime office assets.
IOMH owns the Investa Management Platform (IOM), a real estate company and fund management platform with around A$12 billion under management. After Oxford acquired the Investa Office Fund (now Oxford Investa Property Partnership) in December 2018, IOM became Oxford’s local property, development and asset management partner for its portfolio assets.
Source: Investa; Oxford Properties