Insto roundup: Trump aims to cut US inflows to China; GPIF seeks green bonds
AUSTRALIA
Don Russell has been announced as chairman of AustralianSuper, taking over from former Australian Industry Group chief executive Heather Ridout.
Ai Group and the Australian Council of Trade Unions are joint shareholders in AustralianSuper, which is the nation's largest superannuation fund.
Russell is one of two independent directors on the AustralianSuper board and the fund's first independent chairman. He was previously a global investment strategist at BNY Mellon Asset Management Australia and served as Australia's Ambassador to the USA in Washington between 1985 and 1993, and again in 1996.
Source: Australian Financial Review
CHINA
Trump administration officials are discussing ways to limit US investors’ portfolio flows into China, which include delisting Chinese companies from US stock exchanges and limiting US exposure to the Chinese market through government pension funds.
Exact mechanisms for how to do so have not yet been worked out and any plan is subject to approval by Donald Trump, who has given the green light to the discussion. Trump officials are also examining how the US could put limits on the Chinese companies included in stock indexes managed by US firms.
Source: Bloomberg
INDIA
The Life Insurance Corporate of India lost more than INR200 billion ($2.83 billion) from its investments in five state-owned companies in India in about two years.
India’s biggest life insurer has been investing in state-owned firms and public sector banks to bail out the government. It has also lent to sectors including railways, road and power over the past few years.
Data released by the Reserve Bank of India indicated that the lifer’s share of public investments increased to 85% year-on-year as of March this year from 79%.
Source: The Print
JAPAN
The Government Pension Investment Fund will likely announce next week whether its chief investment officer will continue to manage the monolith’s $1.48 trillion in assets. Current CIO Hiromichi Mizuno's term ends on Monday (October 6).
Mizuno has captained sweeping changes to the investment strategy of the world’s largest pension fund since being appointed in January 2015, overseeing its shift to stocks from domestic debt, while advocating assets that incorporate environmental, social and governance factors.
Even if the GPIF announces a new investment chief, any market reaction is likely to be limited, according to Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management. “There’s no doubt that Mr. Mizuno has played a key role. However, it’s hard to think that the GPIF’s policies and stance will change suddenly even if he leaves," said Matsumoto.
Source: Japan Times
GPIF will begin allocating substantial amounts of money to bonds with an environmental purpose as early as April 2020, in a move that springs from the fund's new focus on environment, social and governance investing.
Starting from October, the pension fund will solicit green-bond indexes from private-sector index companies. The GPIF's move could influence other institutional investors in Japan, deepening the market for these bonds.
In addition, GPIF is set to invest "several hundred billion yen in overseas diversity companies from financial year 2020".
KOREA
Assets under Korea’s National Pension Service (NPS) exceeded W700 trillion ($582.6 billion) in July for the first time in 31 years since inception, with returns averaging 8.06%. The world’s third largest pension fund said Friday its assets under management added W7.69 trillion on month and W65.5 trillion on year to total W704.34 trillion as of late July.
Its average return rate in July was 8.06%, while the annual average returns since the fund’s inception in 1988 came at 5.52%. Overseas stocks and bonds led the growth, with a return rate of 23.38% and 12.67%, respectively. Domestic stocks logged returns of 2.42%, domestic bonds 4.49%, and alternative investments 5.47%.
Domestic stock markets were bearish, but overseas markets rallied on expectations for a possible breakthrough in the global economy amid monetary easing by major central banks recently, the NPS said. The dollar strengthening also helped its US assets.
Source: Pulse News
South Korea’s state-run policy lender Korea Development Bank said September 30 it plans to sell its majority stake in a life insurance unit by 2020 through an open tender. This is the fourth time it is attempting to sell its stake.
Some 88 million common shares of KDB Life Insurance owned by KDB through a private equity fund KDB-Consus Value PEF and a special purpose company will be sold. These account for over 90% of the whole stake. According to the current plan, bid managers will accept letters of interest by potential buyers and shortlist them by November.
The most preferred bidder will be selected before the year-end, followed by a stock transaction in 2020. Credit Suisse Securities and Samil PricewaterhouseCoopers were selected as bid managers. Firms that interested in the acquisition include Seattle-based actuarial firm Milliman and Seoul-based law firm Lee & Ko.
Source: The Investor
MALAYSIA
Malaysia’s largest pension fund Employees Provident Fund will continue to invest in the UK in spite of uncertainties around Brexit, its chief executive Tunku Alizakri said.
“It is usually in times of uncertainty that people want to get rid of assets. For EPF, which has a deep pocket and has a long-term investment horizon, this is a great time for us to get quality assets from those who are unable to withstand the uncertainties presented by current global developments,” he added.
The fund previously bought Sports Direct International’s UK headquarters building for £120 million ($147.5 million) in May. It’s investments in the UK made up 3% of its overall investment assets as at the end of 2018, which totaled Rm833.8 billion ($199.1 billion).
Source: The Edge Markets
SINGAPORE
Singapore’s sovereign wealth fund GIC has partnered with Charter Hall for a A$420 million ($283.8 million) deal to buy an office building in southeastern Australia from Brookfield Properties.
The 15-storey building has been refurbished by Brookfield, which has owned the property for over a decade. The parties had agreed to terms that would require the approval of Australia’s Foreign Investment Review Board.
Source: IPE Real Assets
Temasek’s 10 trusts in its portfolio averaged a total return of 42.2% over a three-year period as at September 20.
In the Singapore Exchange’s report on the investor’s investments, it noted that the total returns for the trusts over a five-year and 10-year period amounted to 67.4% and 82.7% respectively.
The 15 locally listed companies in Temasek’s portfolio averaged a three-year total return of 6.1%.
Source: Business Times
TAIWAN
Fubon Life was fined NT$2.4 million by the Financial Supervisory Commission (FSC) after it was found to have violated investment rules in 2018.
The insurer’s pre-investment assessments were not detailed enough while its post-investment was also not well-handled, FSC said. It lacked an overall cash-flow analysis of investment underlying assets and did not appropriately analyse issuers’ significant negative market events, among others. Risk control measures were also found to be not stringent enough.
Source: FSC
INTERNATIONAL
Canada's largest public pension funds are pushing further into emerging markets, particularly Asia and Latin America, by boosting target allocations to the asset class, looking for ways to partner on new deals and bringing in additional staff with expertise in the area.
The C$201.4 billion ($151.6 billion) Ontario Teachers' Pension Plan is "investing significantly" in the asset class, especially in Asia, said Jo Taylor, executive managing director, global development. Its exposure to emerging markets fluctuates between 10% and 20% of the total pension fund.
By 2025, the Canada Pension Plan Investment Board, Toronto, which had C$400.6 billion in assets as of June 30, expects to have up to one-third of its fund in emerging markets such as China, India and Latin America, said Alain Carrier, senior managing director and head of international, in an email. It announced the move earlier this year in its annual report.
AsianInvestor interviewed the seniormost Canadian pension funds in late 2018 and reported on their interest in expanding Asian investements.
Source: IPE