AUSTRALIA

Australia’s superannuation industry recovered in 2019 with the global equity market, posting the biggest return since 2013.

The median growth fund, where the bulk of Australian super assets are allocated, returned 14.5% the calendar year, according to an estimate compiled by Chant West. A 24% rally for domestic equities in 2019 and a gain of as much as 27% in international shares boosted the results.

Chant West senior investment research manager Mano Mohankumar warned that while results in Australia were a marked improvement on 2018, when growth funds were down 4.6% in the final quarter, the results were not sustainable over the longer term. He said investors should expect more “modest” returns in the future.

Source: Investment Magazine

CHINA

The head of hedge-fund investments at China Investment Corp. has resigned to seek other opportunities, according to people familiar with the matter, adding to a slew of senior departures at the $941 billion sovereign wealth fund. Roslyn Zhang, a managing director in CIC’s fixed income and absolute return department, submitted her resignation in recent weeks, the people said, asking not to be identified because the details are private. Beijing-based CIC didn’t immediately respond to an email seeking comment. Zhang’s departure extends a string of senior executive resignations in recent years including the fund’s heads of private equity and asset allocation. Most exits came during the two-year stretch when CIC was without a top leader. The government appointed Peng Chun as chairman in April, filling that void.

Read more at: https://www.dealstreetasia.com/stories/china-investment-corp-168784/  

China Investment Corp's head of hedge-fund investments, Roslyn Zhang, has resigned to seek other opportunities. 

Zhang is a managing director in the sovereign wealth fund's fixed income and absolute return department. Her departure extends a string of senior executive resignations in recent years, including its heads of private equity and asset allocation. 

Source: Deal Street Asia

Ping An Insurance has become the first Chinese asset owner signatory to Climate Action 100+, an investor initiative launched in 2017 to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. 

Ping An's decision highlights the growing momentum in investor environmental stewardship in China and across Asia. 

Source: Ping An

HONG KONG

Hong Kong’s Mandatory Provident Fund (MPF) in 2020 reported its third-best performing year in the last decade as a global stock market rally last year helped produce an average return of 12.6%, according to data from Lipper Refinitiv. 

It represents a turnaround from the pension scheme’s loss of 8.3% in 2018 and is the joint-third highest annual gain since 2008, behind the 20.9% in 2017 and 27. 5% in 2009 and the same as the return in 2012.

Those opting to put their pension assets in stock funds were the biggest winners last year. Top of the league were the US equity funds which generated an average return of 27.9% in 2019. In second place was the Greater China equity fund, which saw an average gain of 23.2% cent, thanks to the Shanghai stock market climbing 22%.

Source: South China Morning Post

JAPAN

The Government Pension Investment Fund (GPIF) and the Council of Europe Development Bank (CEB) have launched a partnership to promote and develop sustainable capital markets. Their focus will be on social bonds and the incorporation of ESG assessments in fixed-income investments.

“GPIF requires all asset managers to integrate ESG into their investment analysis and decision-making,” Hiro Mizuno, CIO of GPIF, said in a statement. “We regard the purchase of green, social and sustainability bonds as one of the direct methods of ESG integration in the fixed income investment.”

The CEB’s social bonds are issued in alignment with the “social bond principles” that are administered by the International Capital Market Association (ICMA), a Switzerland-based not-for-profit membership association. Social bonds raise funds for projects with positive social outcomes, said the ICMA.

Source: GPIF

The heads of Japan Post Holdings and two affiliates said on December 27 they would resign over the improper sales of insurance policies, after the regulator announced administrative punishments against the companies, effective January 6.

Japan Post Holdings said it had picked Hiroya Masuda, a former minister of Internal Affairs and Communications, as successor to departing chief executive Masatsugu Nagato. Japan Post Insurance president Mitsuhiko Uehira will be replaced by Tetsuya Senda, deputy president of the company, while Japan Post president Kunio Yokoyama will be succeeded by Kazuhide Kinugawa, senior managing executive officer of Japan Post Holdings.

Japan’s financial regulator earlier in the day ordered Japan Post Insurance and Japan Post to halt sales of insurance products for three months from January 1 through end-March, after they were found to have improperly sold thousands of policies.

Source: Reuters

KOREA

The management committee of the National Pension Service (NPS) approved proposed guidelines recently for shareholder activism by the country's largest state pension fund. The go-ahead will pave the way for the fund to exercise its stewardship more actively by, for instance, demanding companies in which it holds stakes to dismiss corporate executives over breach of trust and other illegal activities.

The NPS also designed its guidelines so that it can ferret out those businesses which fail to set up, make public and carry out reasonable dividend policies, or have unduly high ceilings for the salaries of corporate board members. It will then force the companies to rectify these practices and, for those that drag their feet in doing so, make a shareholder proposal for change.

Source: Korea Times, Yonhap News Agency

The Public Officials Benefit Association (Poba) will commit around W130 billion ($111 million) to Axa Investment Managers’ €1.4 billion ($1.6 billion) European logistics fund during the first half of this year, after it achieved a far better-than-expected investment return in 2019.

Poba took part as the only Asian investor in the fund which has 73 assets valued at €1.4 billion across six European countries with an investment period of 10 years, Poba chief executive Han Gyeong-Ho said in a news conference.

The commitment comes after Poba in December teamed up with Danish pension fund PFA and German asset manager Patrizia to buy a European logistics portfolio. Last year, Poba earned a preliminary 7.4% total return on investments, far exceeding its expected 4.5%.

Source: Korean Investors

NPS chairman Kim Sung-joo offered to resign so that he could run in the general elections in April, while the pension fund also created three senior manager positions for strategy, risk management and back office just under its investment head. 

Kim has reportedly tendered his resignation to President Moon Jae-in, who had appointed him as head of the state-run pension fund two years ago. Before joining as chairman two years ago, Kim served as a member of a National Assembly health and welfare committee from 2012 to 2016.

Meanwhile, an amendment to the NPS’s bylaws was announced on December 18 that said CIO Ahn Hyo-joon will focus only on investment for the pension fund, and hand over control of investment strategy, risk management and back office to the new heads.

Source: Korean InvestorsKorea Herald

NPS launched a W1 trillion won ($860 million) fund with SK Group to invest in Vietnamese companies, through which the South Korean conglomerate could ramp up investment in Vietnam’s two biggest companies – Vingroup and Massan Group.

For the corporate partnership fund, NPS and SK will contribute W500 billion, respectively. It will be managed by South Korea’s SKS Private Equity and Stonebridge Capital, according to investment banking sources on December 18.

NPS has set up corporate partnership funds with domestic companies, including power utility KEPCO, to help their overseas expansion since 2011. In 2019, the $610 billion pension scheme earmarked W1 trillion in commitment for three corporate partnership funds.

Source: Korean Investors

The environmental, social and governance (ESG) investment market of South Korea has grown to around W7 trillion ($6 billion). Especially, the ESG investment entrusted by NPS soared from W400 billion in 2007 to W6.2 trillion in July 2018.

In South Korea, ESG investment started in the mid-2000s. At present, NPS, Teachers Pension and Government Employees Pension Service – the country's three largest public pension funds – are increasing their ESG investment.

Source: BusinessKorea

Shareholders of Seoul-based KDB Life Insurance are under intensifying pressure to find a new owner, potentially facing a host of new complex regulations next month when a 10-year grace period expires.

State-run policy lender Korea Development Bank has yet to find a preferred bidder for the life insurance unit, although chairman Lee Dong-gull anticipated finding one through an open tender by end-2019. The uncertainty casts doubt on the bank’s sell-off by February, which would otherwise result in the regulatory complexity.

The shareholders – KDB-Consus Value private equity fund and its subsidiary special-purpose company – will be subject to the expiry of a 10-year grace period to be regulated as an insurance holding company in February, as stipulated in the Capital Markets Act. On the other hand, the fund, jointly created by KDB and local investment house Consus Asset Management, is set to mature by February.

Source: Korea Herald

MALAYSIA

Sovereign wealth fund Khazanah Nasional and Iskandar Waterfront Holdings (IWH) are selling 200 acres of freehold land in Iskandar Puteri, Johor, to Eco World Development Group for RM304.92 million ($74.22 million) to develop homes for the M40 (Middle 40%) income group.

The group said in a statement that its subsidiary, Melia Spring, signed a sale and purchase agreement with River Retreat, the landowner, to acquire the land. River Retreat is a wholly owned subsidiary of Iskandar Coast, which in turn is 80% owned by Iskandar Investment and 20% held by IWH.

Khazanah has a 60% stake in Iskandar Investment, according to its 2018 annual report.

Source: The Malaysian Reserve

Malaysian pilgrimage fund Tabung Haji will focus on strategic investments that are capable of yielding stable returns of its depositors. Chief executive Nik Hasyudeen Yusoff said Tabung Haji would resort to the move under the challenging investment climate locally and abroad.

“Currently, we have RM70 billion ($17.04 billion) in deposits to manage; what we are doing now is to try to invest in a way that would secure us more stable returns. That’s why we (will) invest more in fixed-income assets such as sukuk (Islamic bonds) and real estate,” he told a media conference on the fund’s roadmap in Kuala Lumpur recently.

“Compared to shares or equities investment, we can get dividends and returns when there is a price or capital increase,” he said.

Source: The Malaysian Reserve

NEW ZEALAND

The New Zealand Superannuation Fund agreed to sell its 19.9% stake in Metlifecare to European private equity firm EQT in a $1.5 billion takeover.

Metlifecare's board signed a scheme implementation agreement with the private equity fund manager and recommended shareholders accept the $7 per share offer valuing the retirement village operator at $1.49 billion. The offer was a 50 cent increase from the original bid of $6.50, which the board rejected as being too low after checking with its large institutional shareholders.

NZ Super was among those to support the takeover. It had lifted its stake in the retirement village operator in 2013 when it bought 35.7 million shares at $3.53 apiece, for a total of $126.1 million, from FKP Property's Retirement Villages New Zealand.

Source: New Zealand Herald

SINGAPORE

A Tencent-led consortium that includes GIC and Qatar Investment Authority agreed to take a 10% stake in Vivendi’s Universal Music Group, valuing the music label that houses Lady Gaga and The Beatles at €30 billion ($34 billion) and giving the Chinese firm a global backstage pass.

After months of talks, French media conglomerate Vivendi said on December 31 it had finalised the sale of an initial 10% of the world’s largest music label to the Tencent consortium, which also had the option to buy up to 10% more by January 2021 on the same price basis.

Source: Reuters, The Japan Times
 
Singapore state fund GIC is investing about $61 million in Indian real estate developer Prestige Estates Projects, according to the latter’s regulatory filing dated December 20. The investment is made through a preferential allotment of shares to Gamnat, an investment arm managed by GIC.

Bengaluru-headquartered Prestige Group reportedly has more than 36 million square feet of under-construction and upcoming office properties. It also has six malls in the pipeline and 10 operational retail assets.

The transaction came after GIC’s recent divesting of its stakes in Waverock in Hyderabad to SPREF II, a joint venture between Allianz Group and Shapoorji Pallonji Group.

Source: Deal Street Asia

TAIWAN

Public Service Pension Fund (PSPF) appointed Allianz Global Investors, Fuh Hwa Investment Trust, Cathay Site and Nomura Site for its five-year NT$20 billion ($654.6 million) domestic equity investment mandate

They are required to follow an absolute-return strategy to meet a target return of 200 basis points above the average dividend yields of the stocks listed on the main board of the Taiwan Stock Exchange over the past five years.

Source: PSPF

Sukuk bonds are now open to domestic insurers for investments in Taiwan, according to the local Financial Supervisory Commission (FSC). The instruments are Islamic fixed income bonds issued by foreign issurers and are listed on the international bond market for professional investors.

Moreover, insurers are also allowed to invest in the privately raised corporate debt of foreign-listed companies in order for them to diversify risks in their investment portfolios and enhance returns. The investments are subject to certain rules and quota. 

Source: FSC

INTERNATIONAL

British insurer Prudential will prioritise investing in Asia following the demerger of its UK business as it seeks to step up expansion in the region that already accounts for more than half of its profits.

“This new group . . . will be Asia led,” Nic Nicandrou, chief executive for Asia, said. He said the region would be “the preferred destination of capital for the group, whether it’s to branch out into new segments, develop new products and services, build out new relationships and develop new routes to market”.

In October the firm split its UK M&G business from operations in Asia and the US in a demerger that had been under way since March 2018.

Source: Financial Times

The bushfires burning up swathes of Australia's countryside won't greatly impact US life insurers’ property investment portfolios, but could force a much-needed conversation to take place about how asset owners view their real estate-related assets.

US life insurers had about $4.2 trillion in assets, $523 billion in investments in mortgages, and about $20 billion in investments in real estate at the end of 2018, a tiny fraction of which was exposed to Australia, according to the latest available figures from the National Association of Insurance Commissioners’ Capital Markets Bureau.

However, the bushfires could intensify conversations among life insurers and other real estate investors about how to respond to the 2017 wave of fires in California. To date, little has taken place. Deloitte included an essay by Sharanjit Paddam, a financial services actuary, in its 2018 report on Australia’s mortgage market outlining that an increase in average temperatures could exacerbate problems with bushfires. Most other reports have focused on windstorm and flooding risk. 

Source: ThinkAdvisor

US state retirement systems are adjusting to a “new normal” of lower expected economic growth over the next 20 years and cutting their assumed rate of returns accordingly, found a report from Pew Charitable Trusts.

Pew’s database includes the 73 largest state-sponsored pension funds, which in aggregate manage 95% of all investments for state retirement systems. The think tank said that more than half of the funds in its database lowered their assumed rates of return in 2017 to an average of 7.3%. That’s down from more than 7.5% in 2016 and 8% in 2007 just before the recession hit.

Source: Chief Investment Officer

Almost eight out of 10 millennials now prioritise socially responsible and impactful investing, according to a new worldwide survey by financial advisory group Devere.

Some 77% of millennials – those born in the time period ranging from the early 1980s to the mid-1990s and early 2000s – cite environmental, social and governance (ESG) investing as their top priority when considering investment opportunities.

Source: Financial Mirror