Insto roundup: Nippon Life seeks M&A; New KTCU CIO
AUSTRALIA
Australian superannuation funds recorded positive returns for the seventh year in 2018 but only by a small margin, with the median growth fund gaining 0.8%, the lowest since 2011, according to super ratings agency Chant West.
Among the better performing funds, Qsuper topped the list for the year with gains of 2.8%.
Brad Holzberger, chief investment officer of Qsuper, told Australian Financial Review that the fund's strategy to allocate more to asset classes other than equities, such as bonds, had contributed to its success.
The other better-performing funds in 2018 also share the same trait – they had relatively higher allocations to bonds and unlisted assets, including infrastructure, property and private equity, the media report noted.
Source: Australian Financial Review
Insurance Australia Group (IAG) is considering selling a portion of its stake in its insurance joint venture with State Bank of India (SBI). IAG owns 26% of the Indian insurance business, while SBI holds 74%.
The Australian insurance company will likely sell its stakes gradually over multiple occasions – before SBI General Insurance's initial public offering, during the IPO and after said two people familiar with the development.
Source: Insurancebusinessmag.com
Hostplus is preparing for increasing levels of economic and political uncertainty in 2019 by building a more defensive and flexible portfolio in the face of the threat of trade wars and high asset valuations, said Sam Sicilia, chief investment officer of the Australian superannuation fund.
He also said that more public policy changes were “very likely” as the federal election would be held sometime before the end of the 2018/19 financial year.
Source: Investmentmagazine.com
A former Future Fund private equity director will join the Adelaide-based superannuation fund, Funds SA, as director for growth alternatives, looking after its private equity and infrastructure investments.
Cameron Sinclair left the Australian sovereign wealth fund in December and will be joining the A$30 billion ($21.6 billion) Fund SA in February, replacing Clive Boyce, who retired in October, said a Fund SA spokesman.
Source: Pensions and Investments
Equipsuper has secured an A$190 million ($136 billion) corporate superannuation deal with a Dubai-based air service provider, Dnata.
Dnata will transfer 1,100 of its employees from Qantas Super to Equip, following the Dubai-based firm’s acquisition of Qantas’ catering business in April 2018. "We look forward to working closely with Dnata and Qantas Super to achieve a smooth transfer of the members into Equip," said Nicholas Vamvakas, chief executive of Equip.
Source: Financial Standard
JAPAN
The president of Nippon Life said the company is seeking M&A deals in the US and emerging economies in Asia, as it seeks to expand its business away from a declining local population and into high-growth markets.
Hiroshi Shimizu said the company was looking to expand into the US, as the "world’s largest life insurance market", and added, "we would also like to explore various possibilities in Asia’s emerging countries”. He did not provide details. Japan's insurers have been among the world's most aggressive at offshore expansion, given the declining local population, but Nippon Life has yet to make any acquisitions in the US, beyond a minority stake in asset manager TCW Group in 2017.
However, Nippon Life has been acquiring to grow. Last year it bought 85.1% of the Japanese unit of US-based MassMutual Financial Group for about ¥100 billion (912.19 million), to tap its wealthy clientele. In 2016, Nippon Life bought smaller rival Mitsui Life for $2.5 billion to bolster sales through bank branch networks.
Source: Reuters
Nippon Life Insurance will begin to publicly disclose its approval or disapproval of each proposal made at shareholders meetings at companies in which it is an institutional investor, as the insurer made a belated step to fall in line with its peers and meet the stewardship code of Japan's Financial Services Agency (FSA).
Nippon Life intends to initiate the new policy from the next fiscal year, beginning on April 1, with the insurance company beginning to disclose its votes from the summer. Japanese companies typically hold their annual general meetings during late June.
Its decision follows the FSA revising Japan's Stewardship Code — or guidelines for institutional investors — in May 2017. The code included a call for these investors to disclose whether they approved or disapproved of each proposal made at shareholders meetings of firms they invest into. By December 2018, nearly half of about 240 institutional investors in Japan who had said they would accept and follow the Stewardship Code disclosed their voting, according to the FSA.
Source: The Japan News
About 30.7% of respondents to a new survey by Japan’s Cabinet Office said they are prepared to work until they are between 61 and 65 years old, while 21.5% said they would be willing to work until between 65 and 70.
The survey was conducted in November 2018 and asked 5,000 people aged 18 years or older in Japan, which is seeing its population decrease and age due to a low birth rate. The Japanese government is trying to offer new incentives and opportunities for people prepared to work into old age, including an option to receive an improved public pension if individuals only begin to draw upon it after they are 70 years old.
Source: The Japan Times
KOREA
The Korean Teachers’ Credit Union (KTCU) has appointed its corporate finance department head Kim Ho-Hyun as chief investment officer, succeeding Kang Sung-seog whose three-year term ended last year.
The $23 billion fund has never reappointed CIOs for consecutive terms.The new CIO appointment contrasts with other major pension and retirement savings funds in South Korea which have given CIOs a second term since last year, considering their solid performance.
Source: KoreanInvestors.com
National Pension Service (NPS), Korea’s largest public pension fund, intends to initiate active stewardship coverage on Korean Air and its holding company Hanjin KAL for the first time. It owns 7.34% of Hanjin KAL and 11.68% of Korean Air.
The pension fund, which had W637 trillion ($568 billion) in assets as of October 2018, decided to set up a division focused on stewardship last July. It had its first meeting to decide about how best to impress its stewardship preferences onto Korean Air and Hanjin KAL on January 16, and is likely to finalise its plans by early February.
The fund will begin by deciding how best it can exercise its shareholder rights and then try to come up with more detailed responsibilities. It could call for the dismissal of KAL chairman Cho Yang-ho and pro-Cho board members, following allegations about abuse of power by Cho Hyun-ah, the oldest daughter of the chairman, and a smuggling scandal relating to his family. The stock price of Korean Air fell from $35 early 2018 to $22 in October, in part because of the scandals, but analysts expect it could rise again if investors such as NPS demand better governance and management.
Source: Korea Herald, Joongang Daily, Herald Business (in Korean)
NPS will up its investment share in overseas securities and alternatives and reduce domestic bond holdings this year as it pursues a more aggressive returrns target. The move comes amid expectations that it will deliver a negative return on its investments in 2018.
The pension fund said it will reduce its allocation to domestic bonds to 45.3%, while raise its allocations to alternatives and overseas securities.
Source: Pulse News
SINGAPORE
Standard Chartered’s largest investor, Temasek, has grown frustrated with the slow pace of chief executive Bill Winters’ turnround and is stepping up pressure on the UK-listed bank ahead of his pivotal strategy update in February.
The state-owned investment company, which owns about 16% of the lender, has asked for more frequent and detailed briefings from top executives and even floated the prospect of taking a board seat in a meeting last year, said two people with knowledge of the discussion.
The bank’s share price has fallen almost 40% since Winters took over in June 2015 — deeply underperforming most rivals.
Source: Financial Times
Singapore Life, a digitally-focused life insurer, has attracted a $13 million minority equity investment from UK asset manager Aberdeen Standard Investments.
The investment extends ASI’s strategic relationship with Singapore Life beyond the management of its fiduciary assets, allowing it to participate in the long-term growth of the life insurance company as it expands its business across Southeast Asia.
In December, Singapore Life also bagged $52 million in investment from British billionaire investor Michael Spencer. Singapore Life legally completed the acquisition of the business of Zurich Life Singapore in April 2018.
Source: Aberdeen Standard Investments
TAIWAN
Economic headwinds and uncertainty over interest rate policy are set to hurt investment returns and profits of insurers in both the life and non-life sectors in Taiwan. As regional macroeconomic indicators soften and investor sentiment weakens, the insurance industry is expected to face tougher credit conditions in 2019.
However, the majority of rated Taiwan-based insurers have sufficient capitalisation, risk controls, and underwriting policies to shield credit profiles from market volatility and absorb potential losses.
Source: S&P Global Ratings
INTERNATIONAL
Most institutional investors globally (57%) intend to increase their allocations to Asia-Pacific real estate over the next two years, and 40% of institutions in Asia Pacific plan to raise their allocations to property over the same period, a survey shows.
European investors are the most bullish on Asia-Pacific real estate, with 69% looking to increase allocations in the time frame, followed by 50% of US investors, according to the latest Investment Intentions Survey published by property associations Anrev, Inrev and PREA.
However, 48% of Asia-Pacific investors polled intend to make no changes to their Asia-Pacific allocations, with most instead preferring to increase allocations to the US and Europe.
Source: Straits Times
Allianz is eyeing private credit in India, and the asset class could become more interesting in Indonesia and Thailand, said Ritu Arora, Asia chief investment officer at the German insurance firm.
Her comments came after Allianz Global Investors, the group’s asset management arm, set up an Asian private credit team in Singapore in November last year.
The insurer’s property investment arm, is also considering moving into property financing in Asia, starting in Australia, Rush Desai, Allianz Real Estate’s Asia-Pacific chief executive, told AsianInvestor in April last year.
Sources: Deal Street Asia, AsianInvestor