Insto roundup: NPS’s record loss; SSS of Philippines looks offshore

Kuwait plans a $10 billion fund with China; Nippon Life eyes unhedged foreign bonds; Korea's MMAA appoints six managers for private equity investments; NPS and Norway's sovereign wealth fund report annual losses; Philippines' Social Security System to double foreign exposure, and more.
Insto roundup: NPS’s record loss; SSS of Philippines looks offshore


Kuwait is planning to create a $10 billion fund with China to invest in the two countries, with each responsible for raising half the amount, said people with knowledge of the matter.

The Gulf state is discussing the creation of a Kuwait-China Silk Road Fund that would invest in Kuwaiti projects. It could also be used for strategic investments in China and other areas under the Belt and Road infrastructure initiative.

China would also work with Chinese strategic partners to arrange debt financing for projects, which could give the fund an investment capacity of as much as $30 billion, said the sources.

Source: Bloomberg

The National Council of Social Security Fund (NCSSF) and Ping An Asset Management are cornerstone investors in the Shanghai initial public offering (IPO) of the operator of the Beijing-Shanghai high-speed railway. 

The pension fund is contributing Rmb10 billion ($1.49 billion) take up 8.7% of the enlarged share capital of the listing company, while the asset manager will pay Rmb16 billion take up 13.91%. There are altogether 11 cornerstone investors in the IPO.

Source: Yicai


Nippon Life Insurance is increasing investment in foreign bonds without currency hedge, as it sees limited risk of a steadily rising yen, said chief investment officer Kazuhide Toda last week.

Japan's largest private insurer has total assets of ¥66.7 trillion ($602 billion) and has increased unhedged foreign bonds, riskier than hedged ones, in the current financial year to March 31 and is likely to add more to its portfolio in the next financial year, Toda said. The yen tends to rise against other currencies at times of economic and political stress, cutting the value of Japanese investors' foreign investment.

Toda said the company could also buy more domestic debt, which may be yielding very little but is less likely to see yields rise than bonds in the US or Europe, as their respective central banks tighten policy. Plus Nippon Life aims to constantly increase investments in alternative assets, including private equity, hedge funds, real estate and infrastructure. Being a long-term investor, Nippon Life can afford to invest more in illiquid assets, Toda said.

Source: Reuters

Japan’s Dai-ichi Life Insurance Company is putting in ¥200 million yen into clean energy startup Challenergy, the insurer’s ninth domestic impact investment in 16 months.

Tokyo-based Challenergy is the developer of what it says is the world’s first wind turbine capable of generating electricity under different weather conditions. Challenergy says it will use the funding to accelerate development of the wind turbine for mass production in 2020.

Impact investing refers to investments in enterprises that produce social and environmental benefits, along with financial returns. Dai-ichi Life had ¥36.24 trillion of total assets at the end of 2018.

Source: Asia Asset Management


Carlyle Group said it had acquired a 9% stake in SBI Life Insurance Company from BNP Paribas for Rs46 billion ($649 million).

BNP Paribas Cardif, a subsidiary of the France-based BNP Paribas group, sold 92 million shares or 9.23% of its stake to CA Emerald Investments, an affiliate of the Carlyle Group, according to a statement.

Following the transaction, BNP Paribas Cardif will own 12.8% of SBI Life, while SBI will remain the majority shareholder with a 62.1% stake, Carlyle said in a separate statement.

Source: BloombergQuint; Carlye Group


South Korea’s Military Mutual Aid Association (MMAA) appointed six managers to invest W120 billion ($107.3 million) on Thursday (February 27). MMAA will allocate W10 billion to W30 billion to each manager, W90 billion to private equity funds and W30 billion to venture capitals in total.

Among the six managers, Stic Investments, IMM PE and Q Capital Partners are private equity funds and Partners Investment, TS Investment, Stonebridge Ventures are venture capital funds.

MMAA currently manages around W1 trillion of assets.

Source: Money Today (In Korean)

The National Pension Service (NPS) reported the poorest investment results in its 30-year history, posting its first negative average return since 2008. Its equity-heavy portfolio was blamed most for the negative 0.92% return on average in 2018, with stocks at home and abroad making up 35% of its portfolio.

Domestic stocks returned a negative 16.8%, outweighing the 11.8% return from alternatives, according to an NPS statement on February 28. Alternative investments account for 11.8% of the $570 billion pension service, below its end-2018 target of 12.5%.

Last year’s result marked the first negative return for the world’s third largest pension scheme since 2008 with minus 0.18%, in a reversal from the 7.26% in 2017 – its best performance in seven years.

Sources: Korean InvestorsYonhap News AgencyReutersPulse News

Hana Financial Group adopted a stewardship code, a set of guidelines that encourage major shareholders to push for better corporate governance and higher dividends from the companies they invest in. The group said on February 28 that it will introduce the stewardship code to all its subsidiaries from the end of this month.

Korea's NPS has previously stated that it will give extra points to financial companies with the stewardship code when the agency chooses a firm to manage its investments, and Hana's move is believed to be a result of this.

The financial conglomerate's units operated W108 trillion of assets in trust as of December, a Hana Financial official said.

Source: Korea Times

The combined net profit of insurance firms operating in South Korea dropped 7.4% to W7.27 trillion in 2018, but life insurers' net profit 3.1% to W4.03 trillion, according to the preliminary data from the Financial Supervisory Service (FSS).

"When it comes to life insurance companies, investment income increased in 2018 from the previous year thanks to nonrecurring gains, and this mainly contributed to expanding earnings for the year," the FSS said in a statement.

Source: Yonhap News Agency


Employees Provident Fund (EPF), the country’s largest pension fund, expects uncertainty to be the new norm in 2019 and has said it will remain prudent with investments. According to EPF chief executive Alizakri Alias, this will be a year where “uncertainty will be the new certainty”,” he said at a media briefing earlier this month to announce the fund's annual results.

“Last year, there was so much talk about the upward trend in the US interest rates, and look at what happened next, the US has suddenly taken a very dovish stance. Uncertainty will be the new norm for now,” he said. “It’s going to be challenging this year so let’s stick to what we know and let’s really hunt for the assets that will bring the returns...It’s not a year for us to be adventurous.”

Nevertheless, Alias said there are still investment opportunities globally and particularly in Southeast Asia.

Source: Asia Asset


Philippine pension fund Social Security System (SSS) is doubling its foreign exposure to 15% in a move to diversify its portfolio and raise revenues, according to a recent news report, citing the fund’s top official.

SSS President and chief executive officer Emmanuel F. Dooc as saying that the state-run pension fund has "a plan on investing abroad because the asset allocation for foreign investment has been doubled from 7.5% to 15%".

This will allow the fund to “diversify its portfolio and boost its revenue”, as the fund hopes to increase its return on investments to 7% by 2020 and to 9% by 2022, Dooc said, elaborating that the return last year was only 5.8%, due to the "depressed domestic equity market". Figures from the SSS website show that the fund had Ps507.32 billion ($9.77 billion) of assets under management at the end of 2018, up from Ps504.87 billion a year ago.

Source: PhilStar Global


Sovereign wealth fund GIC was among the investors that helped US cryptocurrency exchange Coinbase raise $300 million last year, a media report said, citing people familiar with the matter.

While Coinbase said it garnered investment in its October funding round from firms including Tiger Global Management, Wellington Management, and Andreessen Horowitz, GIC’s participation hasn’t previously been disclosed.


Temasek Holdings is one of the investors in China-based start-up Gracell Biotechnologies, which raised $85 million from the Singaporean state-owned firm and several Chinese firms to finance clinical trials of a cancer treatment drug.

This is Temasek Holdings’ second such investment in China in seven months. It was one of the investors in a $150 million fundraising by Shanghai-based biopharma company Curon Biopharmaceutical last July.

Several Chinese venture capital and investment firms, including Lilly Asia Ventures, Kington Capital, King Star Capital, and Chengdu Miaoji, also participated in the fundraising, Gracell said in a media statement.

Source: Asia Asset Management


Norway's sovereign wealth fund suffered from its heavy allocations to equity, notching up a NOK485 billion ($57 billion) loss, equivalent to 6.1% of its assets. Norges Bank Investment Management, the fund manager of the Government Pension Fund Global, blamed the hefty loss on weak stock markets in the first and fourth quarters of 2018. 

The poor result was in part the fault of its large exposure to Chinese A-shares, which constitute the largest emerging market asset exposure in its portfolio and performed very poorly last year. Despite this, Norges has said it will maintain this exposure. 

Source: IPEThe Local

The private equity boom of recent years may come to an end this year amid investor concerns about a potential market correction and falling liquidity, according to a report from alternatives research house Preqin. 

Private equity fundraising has exceeded $400 billion a year annually over the past five years, according to a Preqin report. But high pricing is putting pressure on future returns, causing distributions to slow, which has led some managers to lower their expectations for targeted returns.

The industry faces unprecedented levels of competition, as a record 3,749 private equity funds were in the market as of the start of 2019, collectively seeking $972 billion, an all-time high.

Source: Chief Investment Officer

Pennsylvania State Employees’ Retirement System, with $30 billion under management has approved a commitment of up to $75 million to Primavera Capital Fund III, run by Primavera Capital, a Chinese private equity and special situations manager.

Sources: Deal Street AsiaChina Money Network

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