Insto roundup: KIC hunts for China, Europe property; Temasek sees 2.2% AUM drop
AUSTRALIA
The A$52 billion ($37.12 billion) industry super fund Hesta called on the Australian government to encourage institutional investors to take a greater role in a green recovery from the economic crisis.
It comes just a month after the institution announced it would reduce absolute carbon emissions from its investment portfolios by 33% by 2030 and would transition to zero carbon emissions by 2050.
In a submission to the government's Technology Investment Roadmap discussion paper, Hesta urged the government to commit to net zero emissions by 2050, recognising a limited role for gas in that transition. It also suggested the government remove barriers to long-term investment and enable innovative partnerships and structures to boost cleantech investment.
Source: Financial Standard
IFM Investors chief executive David Neal pushed state and federal governments to change the way they contract infrastructure construction so super funds can play a larger part.
Neal, who this year left Future Fund to join IFM, which is owned by 27 major not-for-profit Australian pension funds, said the current procurement process is flawed and prone to cost blowouts that hurt taxpayers.
These problems arise from an over-reliance on large construction firms looking to maximise their profits during the building stage, which exit each project shortly after its completed. Instead, Neal said the government should look to partner with long-term equity partners through a public tender programme.
Source:The New Daily
The federal government has extended the deadline for Australians in financial strife to withdraw A$10,000 ($7,135) from their superannuation funds.
December 31 is now the cutoff for Covid-19 hardship applications for early superannuation withdrawals. The deadline was previously September 24. The original scheme to allow cash to be drawn out of retirement funds permitted A$10,000 before 1 July and a further A$10,000 after that date.
Source: Yahoo! Finance
TelstraSuper has re-appointed JP Morgan as its custodian for another five years.
“JP Morgan’s emphasis on delivering a consistent data model and focus on service delivery were driving factors in their reappointment,” said Miles Mallick, head of investment operations at the superannuation fund, which has A$21 billion ($15 billion) of assets.
The US bank has established itself as the largest custodian in Australia, servicing A$866.7 billion in assets as of the end of 2019, according to the Australian Custodial Services Association.
Source: Global Custodian
CHINA
China launched a major overhaul of its insurance supervisory system to grant more power to local regulators in overseeing parts of the country’s Rmb22 trillion ($3.1 trillion) insurance sector.
The China Banking and Insurance Regulatory Commission (CBIRC) issued guidelines for a supervisory shakeup affecting the country’s 87 property insurers and 13 reinsurers. The move renewed earlier efforts to decentralise regulation in the banking and insurance industries to improve efficiency.
The overhaul will reduce regulatory costs while freeing companies from redundant administrative procedures. The previous concentrated supervisory system could discourage companies from making business innovation said Zhu Junsheng, an insurance industry expert at the Development Research Center of the State Council.
Source: Caixin
KOREA
Korea Investment Corporation (KIC) is seeking to buy commercial properties in Europe and China, in what could be its latest alternative investments. "We are considering making investments one each in Europe and in China," KIC chairman and chief executive Choi Hee-nam said in a recent interview with Yonhap News Agency.
Choi said buyers and sellers of commercial properties had been at odds over the valuation of properties due to the fallout from the coronavirus pandemic, a development that could hinder deals.
The $157 billion sovereign wealth fund's planned investments come amid rising office vacancy rates in the Chinese commercial hub of Shanghai and other major Chinese cities due to the Covid-19 pandemic. It has purchased overseas commercial properties in recent years as part of efforts to diversify its portfolio.
Source: Korea Herald
The National Pension Service (NPS) raised its exposure to pharmaceutical and tech stocks this year amid the coronavirus outbreak while unloading retailers and other virus-hit issues, a corporate tracker said on June 23.
The Korean state pension fund bought stakes of 5% or more in 24 listed companies as of July 24, according to CEO Score. DoubleU Games was the pension provider's top pick as it acquired a 10.2% in the local game developer.
DoubleU Games was followed by drugmaker Handok Pharmaceuticals with 8.52%, printed circuit board module maker Simmtech with 6.25% and JW Pharmaceutical with 5.27%.
Source: Yonhap News Agency
Korea's Lina Life Insurance, an affiliate of US-headquartered health insurer Cigna, denied on July 24 reports that that it was up for sale.
Founded in 1987, Lina Life, the 13th largest insurer in South Korea, has made most of its profits via home shopping channels, reported The Korea Herald.
Source: Asia Insurance Review, Korea Herald
MALAYSIA
The establishment of a royal commission of inquiry to investigate allegations of mismanagement by the former management of pilgrimage pension fund Tabung Haji can only be decided by prime minister Muhyiddin Yassin, said deputy minister Ahmad Marzuk Shaary.
Former chairman and MP Abdul Azeez Rahim had on July 21 asked once more for a royal commission of inquiry to investigate allegations of misconduct by Tabung Haji's previous management under Mujahid Yusof Rawa, and investigate allegations of theft made against him during the Pakatan Harapan administration.
MIDDLE EAST
The Kuwait Investment Authority’s London arm launched High Court proceedings against former executives over an alleged conspiracy to award unlawful pay increases.
The case is part of a broader dispute between the $600 billion sovereign wealth fund and a number of former employees, which began during a period of upheaval after Saleh Al-Ateeqi, a former McKinsey partner who once worked for Tony Blair, was appointed president of the Kuwait Investment Office in April 2018.
The KIO alleges that Caroline Taylor, who had been head of human resources before she was fired in March this year, had helped two senior executives unlawfully amend bonus figures and salary reviews. The individuals in question are Simon Hard, head of fixed income since 2007 and, latterly, acting KIO president, and Prashant Vithlani, head of equities, formerly acting president and a 22-year veteran at the KIO, who were both fired in January.
Source: Financial Times
Sovereign wealth funds in the Middle East are likely to be tapped even more heavily than their peers elsewhere by their respective governments, as they have been hit by both the oil price decline and the coronavirus pandemic this year.
Just as Covid-19 began to dominate headlines in early March, oil prices also collapsed following a spat among producers and a drop in demand. US crude fell into negative territory for the first time.
For Persian Gulf countries in the GCC, the “oil price shock really dwarfs the impact of the coronavirus”, although the pandemic is not helping things, said Krisjanis Krustins, a director on Fitch Ratings’s sovereign team, based in Hong Kong. The rating agency expects wide fiscal deficits across the GCC region of between 10% and 20% of gross domestic product this year.
Source: Pensions & Investments
General Fusion has closed a Series E add-on financing led by sovereign wealth fund GIC, together with deep technology fund IBX. Financial terms were not disclosed.
GIC and IBX join existing investors Temasek, BDC, Hatch, the DLF Group, Gimv, I2BF Global Ventures, Disruptive Technology Advisers, Chrysalix Energy Venture Capital, Bezos Expeditions, Khazanah Nasional, Braemar Energy Ventures, Entrepreneurs Fund, SET Ventures and several individual impact investors.
Source: Private Capital Journal
Temasek Holdings announced on July 21 a preliminary net portfolio value (NPV) of $306 billion in the year to March 31, a 2.2% decline from the record $313 billion achieved a year ago.
Its one-year total shareholder return (TSR) dropped to -2.3%, from 1.49% previously, amid fallout from the Covid-19 pandemic, according to preliminary figures that are based on current unaudited information.
They come ahead of the September release of Temasek's final, audited consolidated group financials and portfolio performance. Its chief executive Ho Ching had earlier this month announced the delay from July in a Facebook post, noting that the coronavirus pandemic had affected financial reporting for many of Temasek's portfolio companies, especially those with operations all over the world.
Source: The Straits Times
INTERNATIONAL
Sovereign wealth funds have become lighter on equities than they had been in six years and their enormous wealth of $8.1 trillion could have lasting impacts on the world’s economy depending on where it flows.
Sovereign wealth funds are planning instead to channel more money into infrastructure, real estate and private equity deals, the Wall Street Journal said. They “held about 20% of their portfolios in such investments during the first quarter, up from 9% in 2014. Stocks accounted for 26%, while cash dipped to 4%.” What’s more, Invesco says SWFs are planning to further reduce their equity positions.
Source: Wall Street Journal, Sovereign Wealth Fund Institute
Ontario Municipal Employees’ Retirement System (Omers) has acquired an additional 7% stake in Asian logistics group ESR Cayman for around HK$3.8 billion (€430 million), taking its holding to 16%.
The Canadian pension fund bought the parcel of some 213 million shares from an associated entity of private equity firm Warburg Pincus, the original and ongoing backer of Hong Kong-listed ESR. Omers was the cornerstone investor in ESR Cayman when it listed in October last year in its second attempt to float.