Insto roundup: BLF shortlists managers; Korea Post’s infra RFPs

AUSTRALIA

The Future Fund posted a gain of 5.8% for 2018, outperforming the strongest superannuation funds for the year on a tax-adjusted basis.

It also reported 9.7% in annualised returns for the past 10 years, beating the Australian sovereign wealth fund’s target of 6.6 %, reported DealStreetAsia.

Source: DealStreetAsia, Australia Financial Review

The Australian Labor Party has called on the government to encourage the country’s superannuation funds to invest into local agriculture.

Joel Fitzgibbon, Labor’s agriculture spokesman, said the perception and risks of the asset class is deterring Australian funds from investing in agriculture. He cited risks associated with the sector that concern investors, such as the industry’s heavy exposure to export markets and growing competition in key export markets.

A recent parliamentary report about investing in the agricultural sector noted the scarcity of data on the industry and that the promotion of a high-risk profile for agricultural investments was “abundant throughout the market”.

Source: The Weekly Times

KOREA

Korea Post’s savings unit plans to select two blind-pool infrastructure funds with a focus on developed countries to invest up to $200 million, according to its request for proposal posted last week. 

To win the mandate, the infrastructure fund should raise at least $1 billion at the final close and be managed by an investment firm with at least $10 billion of infrastructure assets. The state-run agency will receive proposals by February 25 and finalise the selection in April.

Separately, Korea Post’s insurance unit has initiated the selection process to commit up to $300 million to two or three three global infrastructure fund houses focusing on developed markets.

Source: Korea Economic Daily

Non-life insurance firms in South Korea should explore ways to seek business opportunities with their North Korean counterparts, as the isolationist regime is showing growing signs of embracing an open market economy, according to a paper from the Korea Institute of Finance (KIF).

The report suggests the non-life insurance industry in the North could be a market with great potential for growth if international sanctions on North Korea are lifted.

The comments were made in response to the establishment of insurance and reinsurance firms between August 2016 and October 2017, which is seen as a gradual yet firm move by North Korea towards an open market economy.

Source: Korea Times

The total dividend payment by listed companies in South Korea on an annual basis is set to hit W30 trillion ($26.6 billion) for the first time in 2018. The upswing comes amid growing demand from institutional investors such as National Pension Service (NPS) for companies to pay more dividends.

According to Seoul-based financial data provider FnGuide, the total cash dividends of 499 Kospi- and Kosdaq-listed firms that have disclosed figures for 2018  have reached W26.27 trillion as of Sunday, up 25.9% from W20.86 trillion in the previous year.

Industry analysts expect Korean companies to continue improving dividends as institutional investors increasingly start to implement the stewardship code. The code encourages institutional investors to become more vocal in exercising their shareholder rights, and expanding engagement with company management to improve corporate value.

Source: Pulse News

MALAYSIA

Malaysia has given foreign-owned insurance companies until April to outline their plans to comply with local shareholding requirements, the central bank said last week.

Bank Negara Malaysia, which regulates insurers, is pushing to enforce a 2009 rule that sets a 70% cap on foreign ownership of local insurance businesses. 

The bank is expecting insurers to come up with “concrete plans” by early April on how they will comply - via divestments, listings or corporate social responsibility contributions, central bank governor Nur Shamsiah Mohd Yunus told a media briefing.

Source: Reuters; Asian Insurance Review

Employees Provident Fund (EPF) is currently evaluating the possibility of acquiring a stake of up to 30% in a foreign insurance company operating in Malaysia.

 “We are very open towards exploring this [acquisition]. We look at the insurance industry as a huge growth sector in Malaysia. We know for a fact that Malaysia is heavily under insurance at this point in time. We know insurance companies have lot of good infrastructure,” chief executive officer Tunku Alizakri Alias said at a press conference on Monday.

Source: New Straits Times

Malaysia’s sovereign wealth fund, Khazanah, has asked its national carrier unit to produce a strategic plan to help it compete in the aviation industry and deliver better returns, The Edge reported, citing Khazanah's chief executive Shahril Ridza Ridzuan.

Malaysia Airlines is reviewing its existing strategy and is expected to come up with new proposals in “a very short time,” Shahril told the Edge in an interview in Kuala Lumpur.

Khazanah, which took Malaysia Airlines private in 2014, invested RM6 billion ($1.5 billion) in the business in a bid to return it to profit within three years. Ringgit weakness and escalating jet fuel costs derailed the effort and caused the carrier to miss two profitability deadlines, the Edge reported.

Source: Bloomberg; The Edge

SINGAPORE

Sovereign wealth fund GIC is the lead investor in an Rmb850 million ($125.4 million) round of financing for Burning Rock Biotech, a five-year-old Chinese startup specialising in cancer diagnostics.

The other investors are LYFE Capital, Lilly Asia Ventures, CMB International Capital, Sequoia Capital China, and T&Brothers Capital.

The funds will be used for the development of early cancer detection products, and to expand its sales and marketing force, Guangzhou-based Burning Rock Biotech said, according to a media report.

GIC’s share in the investment was not disclosed.

Source: Asia Asset Management

Temasek has made its first investment in the eyecare segment and a single specialty hospital chain in India by picking up a minority stake in Chennai-based Dr Agarwal's Healthcare for an investment of Rs270 crore.

The funds will be deployed for expanding the hospital chain within India, through strategic partnerships, acquisitions and new hospitals. Dr Agarwal's plans to double the number of hospitals from 76 to 150 in three years.

Source: The Economic Times

TAIWAN

The Bureau of Labor Funds (BLF) has shortlisted 10 foreign fund managers for its $1.5 billion emerging market equity mandate that will employ multi-factor strategies: BlackRock, Franklin Templeton, Invesco, Nomura Asset Management, Wellington Management Company, State Street Global Advisors, Lazard Asset Management, DWS Group, Robeco, and Amundi.

Five of them will finally be appointed for the mandate; each manager will be given a quota of $300 million. The shortlist came three months after the request for proposal was issued.

In the next stage, the ten managers will have to make presentations in March before potentially going on to negotiate fees and signing their respective contracts with BLF.

Source: Asia Asset Management

INTERNATIONAL

Washington State Investment Board (WSIB) plans to help create a new Hong Kong-based property investment manager by transferring assets held through its long-running partnership with Chicago-based Evergreen Investment Advisors.

The $129 billion US pension fund manager has recommended committing $250 million to set up Crane Capital and transferring $400 million of assets to the start-up company. The new company would initially focus on property markets in Asia before expanding into other regions. Asia accounts for 4.2% of WSIB’s global real estate portfolio.

The recommendations were made at the pension fund’s private markets committee meeting on 7 February. The board will vote on them on 21 February.

Sources: Sovereign Wealth Fund Institute; Investment & Pensions Europe

Investors in Greater China are particularly likely either to buy small-sized exchange-traded funds or to use smart-beta ETFs to replace actively managed mutual funds, according to a survey by investment bank Brown Brothers Harriman and ETF.com.

Nearly half (47%) of respondents polled in Greater China said their rule of thumb for the minimum size of ETF they would invest was $25 million in assets under management, compared to 36% in the US and 35% in Europe. Meanwhile, 38% of Greater China investors said that the reason they had bought a smart-beta ETF in the previous 12 months was to replace an active fund, compared with 26% in the US and 23% in Europe.

Other key findings of the research: global holdings of ETFs are set to rise; the historic ETF returns are now assigned as much importance as cost; and smart-beta ETFs are currently being used more for risk mitigation or volatility controlan for alpha generation.

The poll surveyed 300 institutional investors, financial advisers and fund managers across Europe, the US and Greater China (a third from each region).  It incorporated 89 institutional investors, 151 investment/financial advisers and 60 fund managers.

Source: Brown Brothers Harriman

Institutional allocations to renewable energy are set to rise from 4.4% to 7.1% over the next five years, with $210 billion expected to flow into the asset class, according to a report by UK investment firm Octopus Group.

The main driver for investing in renewables is low correlation to financial markets, while the second biggest driver is a focus on environmental, social and corporate governance (ESG) investing.

Conducted by CoreData Research, the survey polled 100 institutional investors from the UK, Europe, the Middle East, Africa, Asia and Australia, with a collective $6.8 trillion of assets under management.

Source: Investment & Pensions Europe