Insto roundup: Taiwanese insurer profits surge; Could NPS be split into sections?
AUSTRALIA
UniSuper is not fazed by the dizzying run-up in technology pioneers and is sticking to its bullish stance despite warnings from some corners on extended valuations. The superannuation fund's mainstream portfolios still see long-term potential in US megacap tech firms, chief investment officer John Pearce said in an interview on August 12.
"In terms of our more mainstream portfolios, we're still a big fan of the Faangs [Facebook, Amazon, Apple, Netflix, Google]," said Pearce, who oversees some A$80 billion ($57 billion) in retirement savings. "We're likely to be a patient holder expecting a bit of a pullback, rather than a seller."
Source: Bloomberg Quint
Logos Property formed a new partnership with the New South Wales government's financial management and investment arm, TCorp, in the acquisition of A$172 million ($123.44 million) worth of assets from Sigma Healthcare.
It is under a sale-and-leaseback agreement for 15 years, with options to extend the lease, and comprises two distribution centres from Sigma Healthcare in Kemps Creek in Sydney, and Berrinba in Queensland.
Logos's head of Australia and New Zealand, Darren Searle, said the partnership with TCorp is focused on assembling a premium core logistics portfolio underpinned with "high quality, well-leased assets" in strategic locations across Australia.
Source: The Sydney Morning Herald
CHINA
Chinese authorities are doubling down on pressure to get the nation’s biggest state-owned financial groups, including China Investment Corporation, to reduce salaries.
The reductions serve to boost returns as the virus-hit economy faces its slowest expansion in four decades. They will vary among firms based on a formula, but could reach an average of 30% at some companies.
Besides the $940 billion sovereign wealth fund, other institutions being instructed to adjust salaries include China Development Bank, ICBC and Citic Group, which controls the biggest brokerage, Citic Securities.
Source: Bloomberg
China’s general insurance is forecast to have a compound annual growth rate (CAGR) of 4.1% between 2019 and 2023, down from pre-Covid-19 projections of CAGR of 6.8% for those years, according to data and analytics firm GlobalData.
This makes it an attractive market for foreign insurers but presents significant challenges to them according to data and analytics firm GlobalData. All the insurance firms in the top 10 in China are domestic firms, leaving foreign players trailing.
China’s insurance industry is expected to play a pivotal role in the country’s economic recovery by assisting businesses and individuals in mitigating the risks of the pandemic.
Source: Asia Insurance Review
JAPAN
Masataka Miyazono, the president of Government Pension Investment Fund, said it was looking at a range of foreign debt as it seeks steady returns after swinging from a record loss to a historic gain in the first six months of the year.
“We’re going to increase the sophistication of our investment, while closely monitoring the risk-return,” said Miyazono. “Apart from foreign sovereign bonds there’s also mortgage debt, corporate debt to consider.”
Some options for the ¥162.1 trillion ($1.5 trillion) fund could include redeploying funds parked in short-term Treasuries into riskier assets after global sovereign yields dropped to record lows. GPIF is also considering European debt following the European Union’s agreement on a recovery fund, he said.
Source: Japan Times
KOREA
The National Pension Service needs to be split to enhance the efficiency of the South Korean state pension fund’s operations and reduce its heavy reliance on local markets for investment returns, a parliamentary research report showed.
NPS had W749 trillion ($627 billion) in assets under management as of the end of May, and its assets are expected to rise to W1 quadrillion by 2024. While it invests most of this in local financial products, in a recent state affairs analysis report, the National Assembly Research Service proposed the country discussed splitting NPS into a few separate organisations to ensure higher returns from the assets it manages.
“The NPS, as a single entity, creates a problem in operating its fund, given that its assets are too large for the size of the local financial markets,” the parliamentary research arm said in the report.
Source: Korean Investors
Foreign insurance companies are set to follow in the footsteps of Prudential Financial and put their Korean units up for sale to meet tightened accounting rules and cash out of the Korean insurance market where growth is slowing.
One is US life insurer Cigna, which is understood to be preparing to sell local unit Lina Life Insurnace, although the company said nothing had been decided. Also talked about are US insurer MetLife, China’s Anbang Insurance, which owns Tongyang Life Insurance, and some European non-life insurance companies.
Such a possibility looms large after Prudential sold its Korean insurance arm, Prudential Life Insurance Company of Korea, to KB Financial Group for about W2.3 trillion ($1.9 billion) in April as part of the US insurance giant’s efforts to shed overseas assets ahead of the 2022 implementation of US life insurance accounting reforms.
Source: Korean Investors
MIDDLE EAST
Saudi Arabia’s sovereign wealth fund sold $5.5 billion worth of shares in major multinational firms a few months after buying into them, while it has bought nearly $4.7 billion of exchange-traded funds focused on the real estate, utilities and materials sectors, a US filing showed.
The roughly $300 billion Public Investment Fund had picked up the minority stakes in big corporates such as Boeing, Facebook and Marriott International, as they plummeted in the first quarter amid the Covid-19 pandemic.
The PIF also hired Feta Zabeli, a former chief risk officer at Morgan Stanley Investment Management, in June as it expands its international portfolio, sources told Bloomberg. It also hired Maziar Alamouti, an ex-head of trading for UK wealth manager Quilter Investors, to bolster its international trading capabilities, said the sources.
Source: Wall Street Journal; Bloomberg
SINGAPORE
Temasek Holdings became one of the largest shareholders of BlackRock after adding a 3.9% stake worth about $3.5 billion (S$4.8 billion). BlackRock is the world's largest asset management firm, with assets under management of almost $7.4 trillion at the end of last year.
The Singapore state investment firm was one of several players that bought BlackRock shares when PNC Financial Services Group sold a $14 billion stake this year, according to people familiar with the matter. Temasek added 5.95 million shares in the second quarter, according to its 13F filings Friday with the US Securities and Exchange Commission.
Source: The Straits Times
Axa is considering a sale of its Singapore business as it seeks to raise funds divesting peripheral operations, according to people familiar with the matter. The French insurer is working with an adviser on the potential sale, the people said.
The Singapore unit, which offers life and property-and-casualty insurance, could draw interest from rivals seeking to expand in Southeast Asia, the people said. It generated €615 million ($723 million) of revenue in 2019, according to Axa's annual report.
Source: Bloomberg
Shortly after pulling out of their $3 billion (S$4.1 billion) bid to acquire Keppel Corp, Singapore sovereign wealth fund Temasek and Leaps By Bayer, the investing arm of German multinational pharmaceutical giant Bayer, unveiled a new vertical farming company called Unfold.
The firm will have commercial and research and development operations in Singapore and the US.
Source: The Independent
Australia's Ampol said on August 17 it would sell a 49% stake in a property trust that owns convenience stores to Singapore sovereign wealth fund GIC and Charter Hall Group for A$682 million ($489.5 million).
The sale comes months after a A$8.8 billion ($6.32 billion) takeover of Ampol – formerly known as Caltex Australia – by Canada's Alimentation Couche-Tard was shelved as a result of the financial blow and plummeting fuel margins caused by the coronavirus crisis.
Source: The Straits Times
TAIWAN
Taiwan’s top life insurers recorded higher profits in seven months this year than in all of 2018 and 2019, due to growth of their core insurance businesses and investment returns.
The insurers' equity portfolios recovered as stock markets bounced back from Covid-19-influenced drops in the second quarter, said Jenny Chen, an insurance industry analyst at the Taiwan Institute of Economic Research.
The island’s six largest life insurers earned a combined profit of NT$126.7 billion ($4.3 billion) between January and July 2020, a 26.57% increase from NT$100.1 billion in 2019, and 41.88% from NT$89.3 billion in 2018. In July alone, the firms – Cathay Life, Fubon Life, Taiwan Life, Nan Shan Life, Shin Kong Life and China Life – posted a record monthly combined profit of NT$40.3 billion.
Source: Asia Asset Management
INTERNATIONAL
The Turkey Wealth Fund (TWF) is looking to China for investment in major infrastructure projects, amid plans to invest more in Asia as relations with the West deteriorate.
TWF chief executive Zafer Sonmez unveiled plans to tie Turkey into China's Belt and Road Asia-to-Africa infrastructure initiative much more deeply by “creating platforms and institutions that can team up with Chinese institutions”. In his view, Turkey is “unfortunately lagging behind” on the Chinese initiative, when it could be a key player.
Set up in 2016, the sovereign wealth fund had $223 billion in assets, including $33 billion in equity, as of the end of 2018. It is looking for foreign and local partners and aims to hit $100 billion in equity value by 2023.
Source: Nikkei Asian Review
Canada Pension Plan Investment Board (CPPIB) saw its total assets rise from $409.6 billion at the end of March to $434.4 billion at the end of June, which consisted of $22.9 billion in net income after all CPP Investments costs and $1.9 billion in net Canada Pension Plan (CPP) contributions.
The fund, which includes the combination of the base CPP and additional CPP accounts, achieved 10-year and five-year annualized net nominal returns of 10.7% and 8.9%, respectively. For the quarter, the Fund returned 5.6% net of all CPP Investments costs.
CPPIB’s growth was due in large part to global public equity markets enjoying positive performance, although a strengthening Canadian dollar against most major currencies offset some of these gains. Inflows from the CPP were lower than historic averages reflecting initial forecasts of the impact on employment of the COVID-19 pandemic.
Source: CPPIB
UK defined-benefit pension plans saw their funding deficit jump £24.7 billion in the month of July alone to £199.5 billion ($260.4 billion) from £174.8 billion at the end of June. As a result, their average funded ratio fell to 89.9% from 91% at end-June and 96.5% a year ago, then the deficit was only £62 billion.
The figures are based on the 5,422 schemes tracked by the Pension Protection Fund’s PPF 7800 index, which had an aggregate value of £1.775 trillion as of end-July.
The number of plans in the index that were in surplus fell to 1,737 at the end of July, which accounted for 32% of the plans, from 1,805 at the end of June, which accounted for 33.3% of the plans.
Source: Chief Investment Officer