Insto roundup: Super shake-up looming; Poba seeks debt managers
AUSTRALIA
The A$2.8 trillion ($2 trillion) superannuation industry will remove underperforming funds by having the funds go through a new “right to remain” test. The test will force super funds to justify why they should continue to be the default options for employees.
Super funds will be judged every three years by an Australian Prudential Regulation Authority audit of risk, strategy, scale and insurance.
The Banking Royal Commission and Productivity Commission will likely recommend the measures and pressure the Coalition party and Labor party to reform the industry that was said to be “opaque, ridden with conflicts of interest and unpunished misconduct”, the Sunday Morning Herald reported.
Source: Sunday Morning Herald
The Australian Prudential Regulation Authority’s annual super bulletin shows that the number of women represented on boards has jumped 9.2% in 2018 over the past four years.
The regulator’s data shows that women in 2018 accounted for 32.4% of directorships, which stood at 24.3% in 2014, surpassing the 30%-target that aims to “broaden the pipeline of women at all levels of the organization”.
On the other hand, the proportion of men in directorships went down from 75.7% in 2014 to 67.6% in 2018.
Source: Financial Standard
CHINA
China’s Union Life Insurance plans to sell up to a 51% stake, with an option to raise the stake sale to 100%. AIA and Prudential’s Asia business are believed to be among the foreign firms likely to submit bids. Union Life is expected to be valued at between $1.5 billion and $2 billion.
News of the stake sale comes as China lifted the foreign ownership limit for life insurance JVs to 51% from 50%. Beijing pledged in 2017 to remove the foreign ownership limit completely in three years as it continues its push to open the financial sector.
Source: Reuters
KOREA
Korea Investment Corporation made £37 million ($48 million) from selling a London office building opposite the Bank of England for £107 million, marking its first exit of directly-invested overseas property.
The sovereign wealth fund sold the building at One Bartholomew Lane to London-based Pembrey Asset Management, which reportedly represented a South African investor for the deal. The seven-year investment yielded an internal rate of return of close to 10% for the sovereign wealth fund, or a 53% return on KIC's initial investment, according to sources on January 22.
Source: Korean Investors
The National Pension Service (NPS) disapproved the financial statements of 51 companies during shareholders' meetings from 2014 to 2018, in a sign that it has been gradually flexing its muscles as the largest institutional investor in Korea.
Maeil Business Newspaper’s analysis on NPS’s role in shareholders’ meetings from 2014 to 2018 revealed that NPS refused to approve the balance sheet of 51 firms, including large companies such as Hyundai Mois and Lotte Chemical, due to their low dividend payout ratio.
Market experts believe NPS will step up the pressure on firms to return more to their shareholders in the run-up to annual shareholder meetings, which are largely scheduled in March. NPS has just set up a stewardship division dedicated to executing its shareholder responsibilities and has said it will speak privately to more firms in order to better protect its rights.
Source: Pulse News
South Korea’s Public Officials Benefit Association (Poba) is looking for three European middle-market private debt funds to invest €120 million ($136 million), targeting an annual return of 5% to 6%.
Funds can submit applications through domestic brokerage firms by January 30, and asset managers will have presentations in the third week of February. Poba currently manages around W11 trillion ($9.74 billion) of assets.
Source: Korea Economic Daily, Yonhap Infomax (In Korean)
MALAYSIA
CLSA plans to hire Abang Rahmat Yusuf, a director of investments at sovereign wealth fund Khazanah, as head of Malaysia coverage, people with knowledge of the matter said.
Abang Rahmat’s appointment is pending approval from Malaysian regulators, the media report said.
Source: The Edge Markets
NEW ZEALAND
The New Zealand Superannuation Fund said it will stick to its proposal to develop and operate a proposed light rail network in Auckland with Canada-based CDPQ Infra.
The New Zealand Transportation Agency (NZTA) was supposed to finalise the light rail network business case by the end of 2018 but a decision has not yet been made.
“We are not aware that a preferred procurement model has been agreed upon, nor have we received any updates on the business case work being undertaken by NZTA,” NZ Super Fund spokeswoman Catherine Etheredge said.
In October, Matt Whineray, chief executive office of NZ Super Fund, said the NZTA was still deciding which procurement model it intended to use, while the New Zealand Super had proposed public-public investment (PPI) model, as opposed to a public-private partnership.
Source: Interest.co.nz
SINGAPORE
Temasek, Standard Chartered's largest shareholder, is "very supportive" of the bank, StanChart chief executive Bill Winters has said, following a media report that said the Singaporean investment firm is increasingly unhappy with his restructuring efforts.
Temasek has been putting the bank under pressure, requesting more frequent briefings from executives and even mulling a position on the firm's board, the Financial Times newspaper reported last week, citing two people with knowledge of the matter.
Winters pushed back against that report, saying "I'd be surprised if I read anything in the Financial Times which I hadn't heard from them directly."
"They have been a very supportive shareholder throughout," he told CNBC in Davos, Switzerland. "We have an extremely active dialogue with all of our large shareholders, of course including Temasek."
Source: CNBC.com; Financial Times
Temasek’s chief executive Ho Ching has said that investment returns by Temasek, GIC and the Monetary Authority of Singapore (MAS) are the “single largest contributor” to Singapore’s budget.
Temasek and GIC (formerly known as Government of Singapore Investment Corporation) are sovereign wealth funds of Singapore while MAS is the central bank of the nation.
Ho Ching, who is also Prime Minister Lee Hsien Loong’s wife, added that the investment returns from MAS, GIC and Temasek are a larger contributor to the budget than personal and corporate income taxes and revenue from the goods and services tax (GST).
Source: Independent (based in Singapore)
TAIWAN
Public Service Pension Fund (PSPF) has hired six local fund managers to equally share its NT$30 billion five-year domestic equity mandate.
The chosen managers are Fuh Hwa Securities Investment Trust Enterprise (SITE), Nomura Asset Management Taiwan, Cathay SITE, Uni-President Asset Management, Capital Investment Trust and Prudential Financial SITE.
Source: PSPF
INTERNATIONAL
The Canada Pension Plan Investment Board (CPPIB) is sticking to its investment plans in China despite political and security-related conflicts between Beijing and major Western economies, as well as a predicted growth slowdown for the world's second-largest economy.
CPPIB’s investment into China is “more of a diversification call than a market call for the next few weeks or months”, Mark Machin, president and chief executive of the $368 billion ($277 billion) public fund, told CNBC at the World Economic Forum in Davos.
CPPIB aims to nearly treble its allocation to China to up to 20% of its total AUM by 2025.
Source: CNBC
German insurer Allianz plans to enter the general insurance sector in Vietnam through a digital joint venture (JV) with local IT company FPT Group.
Under the memorandum of understanding, signed at the World Economic Forum in Davos last week, FPT Group will help Allianz develop digital insurance products and services.
FPT will provide access to its distribution channels and affiliates, advise and assist Allianz with local market knowledge, and connect the firm with FPT’s subsidiaries and partners.
Source: Allianz