Insto roundup: Korean pensions shore up local stocks, shun Japan assets
AUSTRALIA
Australia’s biggest pension fund, AustralianSuper, and Canada’s Ontario Teachers’ Pension Plan have agreed to invest up to $1 billion each in India’s National Investment & Infrastructure Fund (NIIF), the sovereign wealth fund said in a statement on August 6.
Source: Reuters
AMP has resurrected the sale of its life insurance business by saying it would sell the unit to British insurer Resolution Life for A$3 billion ($2.04 billion) on revised terms.
The move is part of a strategic reset aimed at salvaging scandal-plagued AMP, which also includes raising A$650 million in fresh equity and implementing a cost-cutting programme.
Source: Financial Times
CHINA
China Investment Corporation plans to take a large stake in troubled domestic commercial lender Hengfeng Bank, the third such intervention in as many months following two decades without a government bailout of a bank.
Central Huijin Investment, an arm of the sovereign wealth fund, is in talks to invest in Hengfeng, according to three people familiar with the matter. They declined to comment on the size of the deal.
With Rmb1.42 trillion ($201 billion) in assets, Hengfeng is more than twice the size of the two other lenders – Baoshang Bank and Bank of Jinzhou – that received support this year. This comes as the Chinese state escalates its fight against systemic risk in the country’s banking system.
Source: Financial Times
Japan’s Government Pension Investment Fund and the Asian Development Bank have formed a partnership to support green project financing through investments in green bonds issued by ADB.
The aim is to help GPIF fulfil its stewardship responsibilities for environment, social and governance investments.
Tokio Marine Holdings is considering buying the general insurance business of Malaysia’s RHB Bank for about RM1.5 billion ($357 million), according to people familiar with the matter, as the Japanese insurer seeks to boost its presence in the Malaysian market.
The price tag would be equivalent to three times the RM500 million book value of RHB Insurance’s assets, the people said, requesting anonymity.
Source: The Malaysian Reserve, Bloomberg
KOREA
National Pension Service (NPS) and other Korean public pension funds have pumped a record W1.5 trillion ($1.24 billion) into domestic equities this month, as they hit multi-year lows amid US-China trade tensions.
The funds bought W520.7 billion worth of shares on Monday, August 5 as the stock market tumbled 2.6%. It was their largest daily purchase of domestic shares since August 2011, and they followed it by buying another W432.8 billion of stocks the following day.
These purchases come as authorities scramble to stabilise financial markets and have stressed the need for institutional investors to extend a helping hand.
Source: Reuters
Calls have been growing for the Korean government to restrain NPS from investing in Japan, as the economic fallout from a dispute between Tokyo and Seoul over wartime reparation worsens.
The state pension fund has invested at least W1 trillion ($823 million) in Japanese companies involved in Japan’s wartime slave labour, and it has been under growing pressure to cut ties with those firms.
The fund is reviewing $1.1 billion of investments in Japanese companies that operated during Japan’s colonial rule over the Korean peninsula.
Source: The Korea Times, Financial Times
Investments by Korea Investment Corporation (KIC) in Japanese companies linked to forced wartime labour are also prompting concerns.
The sovereign wealth fund had invested some $412 million – as of last year – in 46 Japanese companies, which are said to have helped war criminals during Japanese colonial rule between 1910 and 1945, Kim Kyung-hyub a representative of Korea’s ruling Democratic Party, said on Friday (August 9).
KIC has invested $3.4 billion in Japanese company shares, which account for 7.4% of its total foreign stock investments, Kim said. Its investment in Japanese bonds stands at around $6.9 billion, 14.4% of its total foreign bond holdings.
Source: The Korea Herald
MALAYSIA
Khazanah Nasional’s divestment of equities in listed companies, shareholdings in partnership and asset sales in the last six months may have exceeded RM9.6 billion ($2.28 billion) as the sovereign wealth fund continues to divest non-strategic assets.
Source: The Malaysian Reserve
MYANMAR
Myanmar has approved six joint ventures between local insurers and five companies from Japan and one from Thailand as the government moves to attract foreign investment and expand the country’s insurance industry, according to the Ministry of Planning and Finance.
The approved life insurance tie-ups are between Capital Life Insurance and Tokyo-based Taiyo Life Insurance; Citizen Business Insurance and Bangkok-based Thai Life Insurance; and Grand Guardian Life Insurance and Osaka-based Nippon Life Insurance.
The non-life joint ventures are between Aya Myanmar General Insurance and Tokyo-based Sompo Japan Nipponkoa Insurance; Grand Guardian General Insurance and Tokyo-based Tokio Marine & Nichido Fire Insurance; and IKBZ Insurance and Tokyo-based Mitsui Sumitomo Insurance.
Source: International Investment
SINGAPORE
Singapore sovereign wealth fund GIC has sold 50% of Sydney’s Chifley Tower office block to two funds managed by Australian property group Charter Hall for around A$900 million ($608 million).
The A$5.3 billion Charter Hall Prime Office Fund and the recently launched Deep Value Property Fund, which is backed by two Australian superannuation funds, have formed a partnership with GIC to own the building.
GIC, which first offered a half stake in the building for sale last year and then withdrew it last November, continues to own the remaining 50%.
Source: IPE Real Assets
Singapore sovereign wealth fund GIC has invested $620 million to acquire 49% of a private infrastructure investment trust sponsored by Indian road developer IRB Infrastructure.
IRB will hold a 51% controlling stake and have management control over the assets. GIC will hold the rights of a financial investor and have corresponding board representation.
Source: Singapore Business Review
Singaporean sovereign wealth fund Temasek has agreed to acquire cybersecurity firm D’Crypt from local telecoms firm StarHub and its founders for an initial S$100 million ($72 million). With performance payments to the founders, the total transaction cost could reach S$133 million.
StarHub bought D’Crypt in December 2017, with that transaction having a maximum cost of S$122 million. StarHub picked up 65% at the time, with the remaining 35% to be transferred from D’Crypt’s founders in the first half of 2021.
Source: Zdnet
TAIWAN
Fubon Life supports the Taiwan financial regulator’s plan to include the ratio of net assets to total assets as an additional capital adequacy requirement for domestic insurers, it told AsianInvestor on August 12.
The ratio can reflect insurers’ abilities to take risks when market volatility is high in the near term as a result of geopolitical events. Fubon Life’s ratio of net assets to total assets is higher than the 3% threshold proposed by the Financial Supervisory Commission.
Source: Fubon Life
THAILAND
Thailand-based Indorama Ventures will acquire the chemical intermediates businesses of US-listed Huntsman Corporation in a deal worth nearly $2.1 billion. The transaction includes $2 billion in cash and $76 million in net under-funded pension, the Thai company said in a statement on August 8.
Source: DealStreetAsia
INTERNATIONAL
The Employees Retirement System of Texas has committed a total of $125 million to two separate Asia-focused funds. This includes a $100-million commitment to Hong Kong-based PAG’s second real estate vehicle.
The New York State Common Retirement Fund has made a $20 million commitment to Hong Kong-based NewQuest Capital Partners’ latest Asia secondaries fund.
Source: DealStreetAsia
Germany’s largest pension fund, BVK, has sold the Midosuji Grand Tower in Osaka to local real estate company Phoenix and acquired a residential portfolio in the Japanese city.
BVK, which acquired the tower in 2015, is seeking to take profits from the office investment while reinvesting capital into the 18 income-producing residential assets.
Source: CBRE Global Investors
Nuveen Real Estate, the investment arm of the Teachers Insurance and Annuity Association of America, has acquired a last-mile logistics centre near Seoul. The acquisition marks the first direct real estate investment in Korea for Nuveen.
The facility, completed in June, is occupied by South Korean online shopping platform Coupang and convenience store chain Emart24.
Source: Nuveen Real Estate
European insurers are increasing their allocations to emerging-market debt, spurred by worries that negative-yielding bonds in Europe might not offer enough returns to meet their future payments.
Signs of the shift can be seen in their participation in recent euro-denominated debt issues by countries like Ukraine, Indonesia, Saudi Arabia, Romania, Croatia, Serbia and Egypt.
Source: Reuters