Investors roundup: Norway's Oil Fund wants more Japanese female bosses; AIA shops in Shanghai
TOP NEWS OF THE WEEK
The manager of Norway’s NOK12.6 trillion ($1.27 trillion) sovereign wealth fund Government Pension Fund Global, known as the Oil Fund, has written to Japan’s financial watchdog and stock exchange saying it has continuous concern about the number of women occupying top corporate roles in the country, but welcomes a proposal that could help.
In a letter to the Japan Financial Services Agency and the Japan Exchange, Norges Bank Investment Management (NBIM) said: “Based on our experience engaging with companies across our portfolio and in Japan, we believe diverse boards tend to be more effective and conducive to the formulation of resilient long-term strategies.”
NBIM’s chief corporate governance officer Carine Smith Ihenacho and senior analyst Séverine Neervoort, who signed the letter, wrote that they noted the increasing number of TSE Prime companies with at least one female director, but said improvements in gender diversity ratios at the executive and management level had not been as widespread.
Source: NBIM
Insurance giant AIA is diving into China’s commercial property sector by paying Rmb5 billion ($716 million) for a 90% stake in a retail-office complex in Shanghai’s Hongkou district, marking the largest cross-border investment in mainland real estate in recent months.
Announced on December 19, the deal by the Hong Kong-based insurer values the recently topped out 230,568 square metre (2.5 million square foot) project at roughly Rmb5.6 billion. Municipal government-controlled investment firm Shanghai Industrial Holdings sold the property after investing nearly Rmb7 billion in the complex over the years.
“Against the backdrop of China’s ongoing opening-up for foreign investments, we see this as opportune timing for AIA to acquire this flagship project in Shanghai, the predominant commercial center of China,” AIA said in response to inquiries from Mingtiandi, adding that the company has been actively seeking investment opportunities in Chinese real estate, among other asset classes.
Source: Mingtiandi
OTHER INVESTMENT NEWS
AUSTRALIA
Australia’s A$3.3 trillion ($2.2 trillion) pension industry had its worst performance in 14 years in 2022 as markets were hit by rising interest rates.
Default superannuation accounts known as MySuper, the benchmark used for industry performance, fell 4.3%, the worst result since the global financial crisis in 2008, according to research house Rainmaker Group. Returns were weighed on by fixed-income assets, which lost value as central banks aggressively hiked rates to battle inflation.
Australia’s funds still outperformed a typical diversified portfolio, as they had previously shunned government debt in favor of alternative assets like real estate, infrastructure and direct lending in search of higher yields. A globally diversified portfolio of 60% equities and 40% fixed interest lost more than 16% in 2022, according to Bloomberg data.
Source: Bloomberg
CHINA
China plans to tighten rules to regulate environmentally friendly, or so-called green funds, as part of its efforts to rein in 'greenwashing' in the world's second-largest climate fund market, sources with direct knowledge of the matter said.
The new rules, which could be in place in the first half of 2023, will mark a major change in a rapidly growing corner of the funds industry in China, where asset managers currently have the leeway to determine the scope of green investments on their own.
The country's funds regulator, Asset Management Association of China (AMAC), has drafted regulations that will require mutual funds or exchange-traded funds to have at least 60% of their assets in the defined green investments category to be eligible to be sold as green products, the sources said.
Source: Reuters
HONG KONG
Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group on December 20 announced that it has entered into a collaboration arrangement with CDP, an international non-profit organisation that runs the global environmental disclosure system for companies, to jointly enhance climate data availability and sustainability reporting in Hong Kong.
The Steering Group and CDP will work together to enhance climate and environmental disclosure, improve data availability and accessibility in Hong Kong; support capacity building to facilitate local companies in disclosing high-quality climate and other environmental-related data in line with existing and upcoming global standards and best practice.
They will also facilitate data flow to provide financial institutions with better data resources to assess climate and environmental-related risks, and support the real sector in the transition towards carbon neutrality.
Source: Hong Kong Monetary Authority
New World Development is selling a Hong Kong hotel for HK$2 billion ($257 million) as the company owned by the family of billionaire Henry Cheng Kar-shun steps up its disposal of non-core assets to reduce its debt load amid spiralling interest rates and slumping property sales.
Local developer Wang On Properties (WOP) has teamed up with New York-based alternative investment manager Angelo, Gordon & Co to take over the 695-room Pentahotel in Kowloon from New World, according to a filing with the Hong Kong stock exchange on Thursday.
The move is part of New World’s strategy to stay resilient amid plunging property sales and the growing cost of debt. The property titan aims to unload HK$10 billion worth of non-core assets during the financial year ending in September 2023, CEO and executive vice chairman Adrian Cheng Chi-kong told investors on a call in July.
Source: South China Morning Post
The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) on December 19 jointly announced their in-principle approval for the further expansion of the scope of stocks eligible for trading under Mainland-Hong Kong Stock Connect.
After the expansion, which will cover both northbound and southbound trading, Stock Connect is expected to include stocks that account for more than 80% of the equity trading in each market.
The expansion will give international investors more choices in A shares in northbound trading, and also expand southbound trading to allow mainland investors to invest in foreign companies with primary listings in Hong Kong that are constituents of Hang Seng Composite Indices.
INDIA
India's pension fund regulator has recommended the federal government introduce a UK-like pension scheme for the country's gig workers, a move aimed at bringing about 90% of the overall workforce into the pension fold.
The Pension Fund Regulatory and Development Authority (PFRDA), which manages over $102 billion in assets, has proposed that workers at food and cab aggregators be automatically enrolled into the National Pension Scheme (NPS), chairman Supratim Bandyopadhyay said in an interview on December 27.
India's informal or unorganised sector employs about 90% of the country's workforce, depriving them of social security benefits. The PFRDA regulates the NPS, India's voluntary retirement savings scheme that was started in 2004 and now has 16.7 million subscribers, including from the government and private sectors as well as from parts of the unorganised sector.
Source: Reuters
JAPAN
Nippon Life Insurance is considering buying more Japanese bonds as yields have climbed to relatively attractive levels, said Akira Tsuzuki, senior general manager of investment planning at the firm. Benchmark 10-year sovereign yields have almost doubled to 0.48% after policymakers raised the cap to 0.50% on December 20.
“It will take a bit more time for markets to digest the BOJ’s move and to figure out how far interest rates will rise,” Tsuzuki said in an interview. “But in terms of yield levels, 1.5% on 30-year bonds is more investable than the past few years. If it is rising to 1.5% to 2.0%, that will be quite a favorable environment.”
Source: Bloomberg
Meanwhile, overseas credit is starting to look attractive to other major Japanese insurers seeking to boost returns as the yen corporate bond market heads for its first annual loss in more than a decade.
Fukoku Mutual Life Insurance and Meiji Yasuda Life Insurance consider taking advantage of any easing in hedging costs to buy foreign debt, especially as a potential change to monetary policy at home makes them more cautious on longer-dated yen debt.
Source: BloombergKOREA
The National Pension Service (NPS) has tapped Seo Won-joo as the new chief investment officer.
Seo served as the CIO of Government Employees Pension Service (GEPS) of Korea for three years from May 2019. At NPS, The his term is two years and can be extended on a yearly basis depending on fund management performance.
Also read: New NPS CIO ticks the right boxes
Meanwhile, NPS is poised to report an annual loss in 2022 for the first time in four years as the global financial markets tumbled on interest rate hikes of major central banks, especially the US Federal Reserve.
NPS, which managed W915.3 trillion ($724.7 billion) in assets as of October 31, saw a cumulative loss of 5.29% on investments, or W51 trillion, in the first 10 months of last year. That compared with a 7.06% loss in the first nine months of last year.
The pension fund lost 20.45% from South Korean shares, 4.84% from overseas stocks and 8.21% from domestic bonds in the period. However, it achieved a 15.64% gain from alternative assets, which made up 16.6% of its assets under management (AUM), and a 4.74% profit from foreign bonds.
Source: NPS
Korean corporate retirement pension funds under management expanded 15.5% in 2021 from a year earlier, government data showed December 19.
Cumulative corporate retirement pension funds in Korea stood at W295 trillion ($226 billion) as of end-December last year, up W40 trillion from a year ago, according to the data compiled by Statistics Korea. A total of 425,000 companies adopted the scheme for their employees as of last year, up 4% from the previous year.
About 6.8 million workers, up 2.8% on-year, were covered by the corporate retirement pension program last year. They accounted for 53.3% of all eligible workers. The scheme introduced in 2005 aims to help fund retirees' severance payments. Companies and employees make contributions to the pension funds, and employees can receive the pension after their retirement.
Source: Yonhap News Agency
PHILIPPINES
The Philippines’ Social Security System (SSS) disbursed P236.3 billion ($4.26 billion) of benefits from January through November, 13.2% more than the P208.8 billion paid in the same period of 2021, as the number of claims rose.
Other factors driving the increase were an increase in the number of members and pensioners, SSS president and chief executive officer Michael Regino says in a statement on December 28. He says the pension fund received 4.58 million claims for benefits in the 11 months to November, 7.3% more than in the same period of 2021.
According to Regino, the number of pensioners grew from 3 million in 2021 to 3.18 million by November this year, while monthly disbursements for retirement, disability and death benefits grew from an average of P16.6 billion last year to P19.53 billion in the first 11 months of 2022.
Source: Asia Asset Management
SINGAPORE
A UK regulator has cleared the proposed acquisition of Student Roost by Singapore sovereign wealth fund GIC and US developer Greystar after the deal was investigated over concerns that it could reduce competition among student housing players in one of Britain’s key markets, a decision published on December 19 showed.
The Competition and Markets Authority had been looking into the potential for the deal to cut competition among student accommodation providers in Birmingham, where the Greystar-GIC joint venture already has significant holdings, potentially resulting in higher prices and lower-quality services for students.
To resolve the issue, the Greystar-GIC JV has agreed to sell one or both of Student Roost’s two Birmingham properties, The Heights and The Old Fire Station, which have a combined 1,392 beds.
Source: Mingtiandi