Insto roundup: CIC, HSBC to create $1.2bn fund; New CEO at First State Super

AUSTRALIA

Deanne Stewart has joined First State Super as chief executive, working together for a brief period with current chief executive Michael Dwyer to ensure a smooth transition before his retirement on November 30. Stewart was most recently chief executive of MetLife Australia, and she has over 20 years’ of global and Australian experience in superannuation and insurance. Dwyer announced his retirement in June after 14 years as chief executive, growing the superannuation fund’s assets under management from $9 billion to $90 billion in that time period.

Source: First State Super

Insurance Australia Group (IAG) announced on November 14 that it, along with 15 other large insurers, had signed up to the UN Environment’s Finance Initiative (UNEP FI).

The partnership, which represents about 10% of total world premiums and $5 trillion of assets under management, is committed to developing new risk assessment tools to help the insurance industry to better understand the impact of climate change on their businesses. Other insurers in the partnership include Allianz, Axa, Swiss Re, and Tokio Marine & Nichido.

Source: IAG

Australia’s Financial Services Council (FSC) released a draft of its revised Life Insurance Code of Practice on November 12 for public consultation. The draft proposes more than 30 changes to the existing code that has been in force since 2017, including banning pressure selling of products and coercive retention tactics, banning medical disclosure checking without reasonable grounds, binding trustees of superannuation funds to the code, and extending coverage of the code to include all life insurance distributors.

The public consultation will be open until January 12, 2019, and the FSC expects the first and second chapters of the code to go into effect on July 1, 2019, and June 30, 2021, respectively.

Source: FSC

CHINA

China Investment Corp and HSBC are in talks to raise a £1 billion ($1.28 billion) that will help the huge sovereign wealth fund to invest in British companies with Chinese links. The fund, which will be managed by London-based private equity firm Charterhouse Capital, will be formally announced next year. HSBC said in a statement that the three parties are in “exclusive talks” and are still negotiating how much capital each entity will contribute.

The proposed fund will be structured in a similar way to partnerships struck by CIC elsewhere in the world, such as the $5 billion US fund set up with Goldman Sachs last year to invest in high-tech manufacturing and infrastructure and a €150m technology initiative with the Ireland Strategic Investment Fund.

Source: Financial Times

China will accept applications early next year from foreign insurers seeking to take control of their local joint ventures and is even weighing giving them full ownership earlier than flagged. The regulator is expected to publish its final guidelines as soon as the first quarter of 2019 and will begin accepting applications from foreign insurers soon after.

Prudential and Sun Life are among the insurers who have expressed interest in recent months in upping their stakes in their China operations, while FWD Group is in the process of obtaining regulatory approval for a majority-owned China insurance joint venture.

Source: Reuters

JAPAN

The Government Pension Investment Fund (GPIF) is now allowed to hedge against currencies, after having added human resources to oversee and conduct such hedging, according to Norihiro Takahashi, president of the world’s largest pension fund.

Takahashi told Reuters that the fund was very conscious of its impact on financial markets, given its vast ¥158.8 trillion ($1.4 trillion) in assets, and he declined to say whether it had so far conducted any currency hedging.

Doing so would potentially have a huge impact; if GPIF were to hedge against just a small amount of its ¥68.8 trillion in foreign assets it would have a huge impact on the yen, most likely causing the currency to quickly strengthen. However, Takahashi noted that GPIF works carefully, slowly making portfolio changes to avoid market dislocations.

Source: Reuters

KOREA

Institutional investors in Korea are proving key supporters of alternative investments among asset owners, as they seek higher yields, according to a new survey by Preqin. The alternatives data provider said in a November 12 statement that it tracks 154 South Korea institutional investors, two-thirds of which invest in at least one alternative asset class. Sixty-three percent of these asset owners allocate to private equity, 47% invest into real estate, and 20% invest into hedge funds. Combined, their investments into alternatives have grown from $405 billion in 2013 to $639 billion.

National Pension Service, the country’s largest pension fund and the third-largest in the world, currently allocates 11% of its W650.8 trillion ($573.3 billion) to alternatives, while other medium-sized pension funds allocated over 30% on average. Banks are the largest set of Korean alternative institutional investors, making up 21% of total investors, with asset managers comprising 20%.

Source: Preqin

MALAYSIA

To comply with new foreign ownership rules, foreign insurers can now choose to either pare their stakes in their Malaysian units or contribute to the B40 National Health Protection Fund, according to the country’s central bank Bank Negara Malaysia (BNM).

“Each (foreign) insurance company now has been given the option, and they are supposed to revert back to BNM with their plans. Based on their plans, we will look on what would be a reasonable timeline for them to comply with the plans that they have submitted,” said BNM governor Nor Shamsiah Mohd Yunus at a media briefing on Malaysia’s economic performance for the third quarter, according to a media report.

Last year, the Malaysia central bank, which also regulates insurers, decided to enforce its 2009 rule setting a 70% cap on foreign ownership of local insurance businesses, which led to a scramble among foreign insurers to draw up plans to trim their stakes.

Eleven insurers including Great Eastern, AIA, and Tokio Marine, are currently wholly owned by foreign firms in Malaysia.

Source: Dealstreetasia

SINGAPORE

Singapore sovereign wealth fund GIC and Raffles City China Investment Partners 3 – a fund controlled by real estate company CapitaLand – have entered into a joint venture to acquire Shanghai’s tallest twin towers for Rmb12.8 billion ($1.84 billion).

The 50-storey Grade A office towers are linked by a seven-storey shopping mall and have a total gross floor area of 312,717 square metres, GIC said in a statement.

The project is expected to open in phases from the second half of 2019.

“We are attracted by the quality of this asset and expect it to generate steady, resilient cash-flows, Lee Kok Sun, chief investment officer of GIC real estate, said.

Source: GIC

Infosys has completed the formation of its joint venture with Temasek.

The JV is expected to help Temasek in its digital transformation while also strengthening Infosys’s footprint in Southeast Asia.

The joint venture will provide Temasek with solutions in advanced technologies including cloud, data and analytics, cybersecurity, digital experiences and artificial intelligence, the Indian consulting and tech services provider said in a statement.

Source: Infosys

THAILAND

A bill to set up a National Pension Fund (NPF) to provide sustainable and inclusive retirement savings is expected to become law during the military-led government's tenure, according to the Federation of Thai Capital Market Organisations (FTCMO). 

As the bill has already received cabinet approval and been assessed by the Office of the Council of State, the final procedure rests with the National Legislative Assembly (NLA) to pass the law, said FTCMO chairman Paiboon Nalinthrangkurn. 

Source: Bangkok Post

INTERNATIONAL

Hong Kong-based PAG's newly raised $6 billion private equity fund, PAG Asia III, largely comprised big US pensions, but also included the sovereign wealth funds of Kuwait and Singapore.

This is the latest sign that investors continue to look to Asia despite the rumbling US-China trade war, according to several people with knowledge of the matter. Shan Weijian, chairman and chief executive of alternatives manager PAG, has a worldwide mandate but invests mostly in Asia, especially in China.

Source: Financial Times

US public pension funds’ investment return assumptions have fallen to an all-time low, according to the National Association of State Retirement Administrators (Nasra). This is likely to mean greater capital commitments will be needed from local and state governments.

Nearly 75% of the 128 public plans tracked by Nasra have cut their investment return assumptions since fiscal year 2010, resulting in an all-time low median investment return assumption of 7.45% as of November. That compares to a figure of 8% eight years earlier.

Source: Chief Investment Officer

California Public Employees’ Retirement System (Calpers) faces a delay before its new chief investment officer – Ben Meng, formerly deputy CIO of China’s State Administration of Foreign Exchange (Safe) – comes on board.

Meng’s arrival will have to wait until some time in January, because he is being prevented from leaving China until his non-compete agreement expires. Eric Baggesen, a managing investment director who directs the pension plan’s asset allocation efforts, will take over as interim CIO in the meantime.

It is unclear when the non-compete expires for Meng, who had been on Calpers’ investment team before his three-year stint at Safe.

Source: Chief Investment Officer