Weekly Digest: MPF gains in H1; Singapore rejigs tax incentives for family offices
TOP NEWS OF THE WEEK
The Mandatory Provident Fund (MPF) system recorded an investment gain of 3.07%, or HK$32.2 billion ($4.1 billion), for the first half of 2023, according to MPF ratings.
After factoring in investment gains and contributions, total MPF assets ended June 2023 at approximately HK$1.11 trillion, up HK$60.5 billion since the beginning of 2023.
US equities was MPF’s best-performing asset class year-to-date.
Despite a rebound in June, Hong Kong and China equity funds ended the first half of 2023 as MPF’s worst-performing asset class.
Additionally, the -20.5% year-to-date return difference between US equities and Hong Kong and China dquity funds was the worst variance since MPF’s launch.
Source: MPF Ratings
The Monetary Authority of Singapore (MAS) announced adjustments to the tax incentives available to single family offices (SFOs) that include recognising a wider range of investments in Singapore and also in climate-related investments outside the country.
MAS will broaden the scope of investments eligible for tax incentives to encourage SFOs to participate in blended finance structures, including those that support a regional transition to net-zero carbon emissions.
It will expand tax incentives to recognise all SFO investments in non-listed Singapore companies, and not just private equity investments, as is the case currently, and it will recognise twice the amount SFOs invest in Singapore-listed equities and certain exchange-traded funds as eligible for tax breaks.
SFOs will be required to employ at least one investment professional who is a non-family member, and all new SFO applicants will have to now meet the MAS’s business spending requirement solely from local spending, not overseas spending.
Source: MAS
HONG KONG
Hong Kong is one step closer to a risk-based capital (RBC) regime for the insurance industry as the city’s legislature on July 6 passed an amendment bill, which establishes the legislative framework necessary to implement the RBC regime.
Based on the core principles outlined by the International Association of Insurance Supervisors, the bill aims to ensure that insurers maintain appropriate capital and solvency levels based on the risks they face.
The Insurance Authority will start preparatory work on drafting detailed requirements of the RBC regime to be followed by public consultation on subsidiary legislation. The regime is targeted for implementation in 2024.
Source: Insurance Authority
The Hong Kong Securities and Investment Institute (HKSI) plans to train virtual asset traders as the city prepares to position itself as a digital hub at a time when regulators around the world are clamping down on online assets.
The HKSI is backed by the local regulator Securities and Futures Commission (SFC) which requires all new centralised virtual asset trading platforms that are operating or selling their services in Hong Kong to be licensed.
Existing operators and their traders have until June next year to apply for licenses under the new regulations.
“We will be running a number of training programmes and seminars on virtual assets in the next few months for those who would like to enhance their knowledge on virtual assets,” said Colin Shaftesley, chairman of HKSI.
Source: South China Morning Post
KOREA
Canada's Ontario government joined hands with a South Korean venture capital firm to establish a fund of 100 million Canadian dollars (US$75.6 million) for investments in healthcare.
Seoul-based LSK Investment said on July 4 that the firm and the government of Ontario agreed to raise 50 million Canadian dollars each for the life science venture capital fund. The fund is the first to be jointly raised by a South Korean venture capital firm and a local government of Canada.
The Ontario government and LSK aim to establish the fund by the first half of 2024 to invest in startups for new drugs in both South Korea and the east-central Canadian province.
Source: Korea Economic Daily
The National Federation of Fisheries Cooperatives has issued a request for proposals for a Korean equity mandate that will be operational in the second half of 2023.
Applicant firms must manage a Korean equity portfolio of at least W10 billion ($7.6 million) and have experience in providing related advisory service as well.
Applications are open until July 12.
Source: Korea Financial Investment Association
South Korea’s state-sponsored Yellow Umbrella Mutual Aid Fund is seeking domestic venture capital managers.
The maximum total amount to be mandated to selected managers will be W80 billion ($61 million).
Submission deadline is July 27.
Source: Korea Financial Investment Association
MALAYSIA
Malaysian prime minister Anwar Ibrahim said the government is open to a proposal by the Employees Provident Fund (EPF) that would make periodic or monthly withdrawals by new scheme members mandatory upon reaching the retirement age of 55.
Periodic withdrawals are currently voluntary, but Anwar said the government would leave any decision on the proposed change to the EPF.
He said EPF Chief Executive Amir Hamzah Azizan also noted some opposition to the proposal from scheme members whose savings were small.
Sources: Malay Mail, Malaysiakini, Malaysia Now
SINGAPORE
The Monetary Authority of Singapore has allocated around 2% of its portfolio – slightly over S$8 billion (US$5.93 billion) to a climate transition programme.
It has pumped funds into two equity climate indices and intends to scale up that commitment, and it has shifted part of its equities portfolio towards less carbon-intensive companies aligned with a low-carbon transition to strike a balance between reducing the portfolio’s carbon intensity and supporting companies transitioning to lower carbon intensity.
The MAS has also divested from companies that derive more than 10% of their revenues from thermal coal mining and oil sands activities.
Source: MAS
The Monetary Authority of Singapore (MAS) has recorded a net loss of S$30.8 billion ($22.8 billion) for the financial year ended March 31.
It made a small investment gain despite the poor performance of both the bond and equity markets, but that was outweighed by negative currency translation effects and interest expenses on MAS’s domestic money market operations.
MAS tightened monetary policy three times during the period, leading to an appreciation of the Singapore dollar against the currencies that the MAS held in euros, yen, pound sterling, US dollars and others, resulting in significant negative currency translation effects as MAS’ financial results are reported in Singapore dollars.
For the financial year, the MAS made no contribution to the government’s Consolidated Fund, and it returned no profits to the government.
Source: MAS
Singapore Exchange (SGX Group) and NSE International Exchange (NSE IX) las week began the full-scale operation of the NSE IX-SGX GIFT Connect unified stock exchange system.
Trading on the US dollar-denominated GIFT Nifty started on Monday morning.
India’s economy is expected to become the world’s third largest, and the GIFT Connect offers international investors a new means of gaining exposure to the country’s equities market.
Source: SGX
TAIWAN
Exposure to China among Taiwan’s banking, insurance and securities firms and mutual funds in May fell about 17% from a year earlier, the Financial Supervisory Commission (FSC) said.
It attributed the drop in exposure to a slowing Chinese economy.
Exposure to China among local investment trust companies and foreign firms with local investors totalled NT$1.49 trillion ($47.5 billion) at the end of May, down more than NT$300 billion from a year earlier, FSC data showed.
Investments by local life insurance companies in Chinese equities fell NT$74.4 billion from a year earlier, or 43%, to NT$99.7 billion, which is only 0.32% of their capital, down from 0.59%.
The Insurance Bureau said that China’s trade dispute with the US and the effects of restrictions during the COVID-19 pandemic were behind the cuts by insurance firms.
Source: Taipei Times
Generali agreed to buy US-based asset manager Conning Holdings as part of a partnership with Cathay Life, a unit of Taiwan's Cathay Financial Holding, the Italian insurer said on July 6.
As a result of the contribution of Conning Holdings Limited into Generali Investments Holding (GIH), Cathay Life will become a minority shareholder in GIH, which comprises the majority of the group's asset management activities, with a stake of around 16.75%, Generali said.
The deal, structured as an exchange of assets without a cash consideration, realises Generali CEO Philippe Donnet's ambition of expanding into the asset management sector in the United States.
Source: Generali
THAILAND
Thai online insurer Roojai has agreed to acquire FWD General Insurance in Thailand from Singapore-headquartered insurtech firm Bolttech.
Following the acquisition, Roojai will increase its market share in Thailand with a combined portfolio worth more than $50 million in annual premium income and become a full digital insurance company with a licence to underwrite general insurance products.
FWD General Insurance will be rebranded and renamed Roojai in Thailand, subject to regulatory approval.
Launched in 2016, Roojai sells motor, accident and health insurance products with its insurance partners and has more than 160,000 customers.
Source: Roojai