AUSTRALIA

Future Fund chief executive Raphael Arndt said “from the investment point of view, things are definitely not going back to normal, with returns likely to be far lower for the next decade while risks rise. 

The sovereign wealth fund head noted that asset prices, fuelled by falling interest rates, have become expensive for investors, even as the level of earnings and margins have changed dramatically during the last 12 months.

“It’s not about market timing, it’s about thinking about how markets are rewarding risk, and trying to have less risk on when it’s not being rewarded and more risk on when it is,” he said. “We don’t think right now is the time to be taking on excessive risk – there’s a lot of uncertainty in the world.”

Source: Investor Daily

Andrew Gray,
AustralianSuper

AustralianSuper announced on November 12 it had dumped its stake in Whitehaven Coal as it ramps up its climate policy to include a net zero emissions by 2050 target.

The A$180 billion ($131.36 billion) pension fund said it would align its investment portfolios with the net zero target by engaging with companies it invests in to help them formalise their transition towards zero carbon operations.

AustralianSuper’s new policy did not include plans to exit high polluters, as competing industry funds such as AwareSuper and Hesta have done. But AustralianSuper director of ESG and stewardship Andrew Gray said the fund had already ceased active investment in thermal coal companies.

Source: Sydney Morning Herald

The real estate arm of industry superannation fund Cbus delivered a return of 6.99% over the 2020 financial year, well down on its long-term average but far higher than the 0.75% handed to Cbus members in their default option.

The A$54 billion ($39.36 billion) fund was among a group of its peers, including AustralianSuper and Unisuper, to move at the onset of the pandemic to write down the value of their stakes in airports, ports, toll roads and property in recognition of the effect the coronavirus would have on unlisted assets.

Source: Commercial Real Estate

CHINA

Chinese insurers’ strategic asset allocation has become “increasingly stable”, with 36.6% of total assets placed in bonds, 12.9% in equities and securities funds, and 27% in various investment schemes, Cao Deyun, secretary general of the Insurance Asset Management Association of China, told an insurance forum in Beijing on November 10.

China’s insurance assets as of September were Rmb22.4 trillion ($3.39 trillion), a 12.4% increase from Rmb19.92 trillion a year ago.

Source: Sina

Hong Kong has surpassed the US as the most preferred destination for cross-border investment among wealthy Chinese in the wake of the coronavirus, according to the “Chinese HNWI Post Covid-19 New Normal” report by China Citic Bank and the Hurun Report.

Hong Kong's share of wealthy Chinese investment flows rising rose 40% in 2019 to 45% this year, against a drop from 61% to 40% for the US over the same period.

Enthusiasm for US investment has nearly halved over the past four years, although its share continues to exceed the sum for the UK, Japan, Switzerland and France.

Source: Hurun

INDONESIA 

Indonesia’s plan to launch its first sovereign wealth fund early next year has hit further uncertainty by US president-elect Joe Biden’s election victory this month.

Coordinating Minister for Maritime Affairs and Investment Luhut Panjaitan was last week reconsidering his scheduled November 15 trip to Washington. He was expected to meet Jared Kushner, President Donald Trump’s son-in-law and senior adviser, and Adam Boehler, head of the US International Development Finance Corp (IDFC), a government finance arm.

Boehler had proposed contributing $5 billion to the fund when he met President Joko Widodo last January. But Indonesian foreign minister Retno Marsudi had advised Panjaitan to call off a November 15 trip, as “Boehler is a political appointee and it is unclear whether he will still be there beyond January”.

Source: Asia Times

 

JAPAN

Four major Japanese life insurers – Nippon Life, Dai-Ichi Life, Meiji Yasuda Life and Sumitomo Life  announced they would strengthen their commitments to environmental, social and governance (ESG) investment in the second half of fiscal 2020.

From 2021 Nippon Life will incorporate the ESG concept in dealing with total assets of about ¥70 trillion. Dai-ichi Life will adopt the ESG concept by fiscal 2023 for its total assets of ¥36 trillion. Meiji Yasuda Life will make use of ESG evaluations of investment targets carried out by external institutions, while Sumitomo Life will utilise data on greenhouse gas emissions and other factors to analyse its investment assets.

Source: The Japan News

KOREA

Korea Post is seeking two international asset managers for a $200 million infrastructure mandate that is structured under its $12 billion commingled overseas infrastructure fund. It is the second mandate under that fund since February 2019, when the institution also sought bids for a $200 million tender.

The fund invests 70% of its assets in North American markets and allocates up to 30% to greenfield infrastructure strategies or equities, the government postal agency said in its request for proposal for the new tender on November 10.

Applications are open until November 20, with evaluation and due diligence scheduled to be carried out between November 25 and December 16. Korea Post had $106 billion in assets as of December 2019.

Source: Asia Asset Management

Korean asset owners said last week at PDI Seoul Forum Virtual Experience 2020 that they were targeting private debt despite increasing risks from Covid-19 and that the pandemic had helped them sort the wheat from the chaff when it came to fund managers.

Cheon Byung-kyu, DGB Life

The Covid-19 turmoil dispelled some illusions about private debt pricing, and offered a change to see how fund managers would deal with the challenges, Cheon Byung-kyu, CIO of DGB Life Insurance.

Park Wan-sun, deputy general manager of Fubon Hyundai Life Insurance, added that the Covid-19 crisis was testing whether measures touted as being good for downside protection really worked in the comparatively new and immature market.

Source: The Investor

Korea Teachers’ Credit Union (KTCU) has appointed former deputy prime minister Kim Sang-gon as chairman. He will serve for a three-year term effective November 12.

Kim succeeds Cha Sung-soo, who left the institution at the start of the year to contest the general election in April. He was the deputy prime minister and education minister from July 2017 to October 2018.

KTCU had W41 trillion ($36.7 billion) of total assets as of June 2020.

Source: Asia Asset Management

MALAYSIA

The Malaysian state of Sarawak in Borneo is undertaking a feasibility study on establishing a sovereign wealth fund, potentially modelled on that of Norway, to ensure future generations will continue to benefit from the state’s oil and gas revenues after resources are depleted.

Chief Minister Abang Johari had mentioned the fund could also act as a buffer in times of financial crisis so that the state was better prepared to face external uncertainties, such as the likes of Covid-19.

Source: The Borneo Post

MIDDLE EAST

Abu Dhabi state-owned holding company ADQ has agreed to buy a 45% stake in Louis Dreyfus Company (LDC), opening the agricultural trader to a non-family shareholder for the first time in its 169-year history.

In return the state fund will have seats on a supervisory board in line with its ownership, along with other rights.

LDC is one of the world’s biggest traders of grains, soyabeans, coffee and cotton, employing about 18,000 people, with turnover in 2019 of $34 billion.

Source: Financial Times

SINGAPORE

Sovereign wealth fund GIC will invest Php20 billion ($412.5 million) into AC Energy Philippines (Acen), a subsidiary of Ayala Corporation's energy platform AC Energy, in exchange for a 17.5% stake. 

The acquisition of the stake is subject to approval of Acen's stock rights offering and follow-on offering, and the infusion of international business into Acen by AC Anergy.

Source: DealStreetAsia

Chinese education technology company Aixuexi Education Group announced it had secured nearly $200 million in a series D2 round led by Singapore sovereign wealth fund GIC. Existing investor Warburg Pincus also participated.

Founded in 2009, Aixuexi provides online courses covering mathematics, Chinese, English, physics, chemistry, biology, science and programming for students from primary to high school.

Source: TechInAsia

GIC and private equity firm Cinven have announced that they have reached an agreement to acquire insurance and reinsurance broker Miller from Willis Towers Watson. The transaction is expected to complete in the first quarter of 2021 and is subject to regulatory approval.

“Miller is one of the top and most established wholesale brokers with highly respected franchises in areas such as marine and energy, sports and entertainment, and cargo. As a long-term investor, we are confident in the growth potential of the specialty insurance sector, and of Miller within it,” said Yong Cheen Choo, chief investment officer of private equity at GIC.

Source: Splash247.com

A $600 million lifeline has been offered by Temasek unit Heliconia Capital Management to troubled Pacific International Lines (PIL), paving the way for a rescue of the world's 10th-largest container shipping line now facing "tremendous strain on its liquidity" amid the pandemic-induced recession.

Singapore-based PIL plans to implement the restructuring via a scheme of arrangement. But the deal hinges on majority approval from creditors that are owed $3.5 billion, said sources.

“The restructuring plan contemplates the provision of fresh financing by the investor (or entities managed and controlled by it) as well as a re-profiling of the company’s debts by way of a scheme of arrangement to be proposed by the company to its creditors, as well as bilateral agreements with certain of the company’s creditors,” PIL told the stock exchange.

Source: The Straits Times

Temasek Holdings is in active talks to make its first direct investment in health care and education tech startups in Southeast Asia, said the state entity's chief investment strategist.

The Covid-19 outbreak this year has fuelled demand for digital health and education services, prompting Temasek to review potential targets to add to its $227 billion portfolio. And the institution has been turning its attention to the two nascent sectors, though it has so far invested indirectly via venture capital funds that it backs in the region.

Source: Business Times 

INTERNATIONAL

Sovereign wealth fund Abu Dhabi Investment Authority and Canada’s Ontario Teachers’ Pension Plan are jointly investing $1.25 billion into Singapore-based infrastructure fund manager Equis Development

Equis is focused on developing, constructing and operating primary and hybrid renewable energy and biomass generation, power grid distribution and transmission and waste infrastructure assets in Australia, Japan and South Korea. It is developing or constructing 40 assets across its target markets.

Source: OTPP

Thirty-eight investors representing some $9.3 trillion in assets have written to 36 of Europe’s largest companies to call on them to properly reflect in their financial statements the implications of global commitments under the Paris Agreement to limit temperature rises to well below 2°C.

The investors comprise mainly retirement schemes and asset managers and include various European and UK pension funds. They are members of the London-based Institutional Investors Group on Climate Change.

However, companies are generally failing to respond to investor demands on climate change, despite the rise in “net zero” from businesses around the world, according to analysis by Swiss private bank J Safra Sarasin.

Source: Institutional Investors Group on Climate Change; Financial Times