Weekly Digest: Credit Suisse takeover impact; Temasek eyes Maharlika investment

TOP NEWS OF THE WEEK

The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) welcomed the acquisition of Credit Suisse AG by UBS AG.

Noting that the total assets of Credit Suisse, Hong Kong Branch amounted to about HK$100 billion, representing less than 0.5% of the total assets of the Hong Kong banking sector, they said the exposure of the local banking sector to Credit Suisse is “insignificant”. 

“The Hong Kong banking sector is resilient with strong capital and liquidity positions.”

In addition, they noted Credit Suisse’s licensed corporations are not among the top 10 active brokers in the stock and derivatives market. Credit Suisse was the ninth-largest listed structured product issuer, accounting for about 4% of the total market by market value of outstanding units at the end of February.

“The HKMA and the SFC will stay in close touch with the Swiss authorities, and will monitor the financial markets very closely," they said in a joint statement.

Source: Hong Kong Monetary Authority

Credit Suisse Group will continue operating in Singapore with no interruptions or restrictions following its announced takeover by UBS, the Monetary Authority of Singapore said.

The central bank said the UBS deal to take over Credit Suisse is not expected to have an impact on the stability of Singapore’s banking system.

Customers of Credit Suisse customers have full access to their accounts, and the bank’s contracts with counterparties remain in force.

Source: MAS

Singapore's Temasek Holdings has reportedly expressed interest in investing in the proposed Maharlika Investment Fund, the Philippines sovereign wealth fund being deliberated by lawmakers.

Department of Budget and Management Secretary Amenah Pangandaman met with Temasek officials led by international relations managing director Eu Jin Chua, institutional director Adrian Chung and associate director for investments Allan Cabrera, a media report said.

Source: Philippine Star

OTHER INVESTMENT NEWS

HONG KONG

Officials from the US audit watchdog will start a new round of inspections in Hong Kong on Chinese companies' auditors as soon as next week, sources said, as part of a deal with Beijing to prevent delistings of the firms from the New York bourse.

For the upcoming inspection, the U.S. Public Company Accounting Oversight Board has picked branches of EY, Deloitte, PricewaterhouseCoopers and some other audit firms in both Hong Kong and mainland China, one of the sources said.

A group of Chinese officials will be sent by the China Securities Regulatory Commission and the Ministry of Finance to assist with the inspection in Hong Kong, the second source said.

Source: Reuters

INDIA

Caisse de dépôt et Placement du Québec (CDPQ) is reportedly in discussions with American Tower Corp (ATC) to purchase a 50% stake in its Indian subsidiary ATC Telecom Infrastructure Pvt Ltd, people with knowledge of the matter told the Economic Times of India.

Both CDPQ and KKR & Co had earlier submitted non-binding bids, but the Canadian pension fund has been quicker to initiate due diligence work, said the source. ATC’s Indian arm is reportedly valued between $1.5 billion to $2 billion.

Source: ET Telecom

The Reserve Bank of India (RBI), in a call with authorised dealer banks, said the intent for allowing overseas direct investment in financial services is not to have wealthy individuals set up family offices overseas.

The central bank has instructed banks not to facilitate such structures as it is not permitted under current regulations, a source familiar with the matter said.

The RBI last year allowed profitable non-financial entities to set up financial services entities outside India and invest up to 400% of the net worth of the investing entity. However, whether financial services activities include investing activity remains a grey area.

Source: Financial Express

INDONESIA

Sovereign wealth fund Indonesia Investment Authority and the International Development Finance Corporation have signed a memorandum of understanding to collaborate and identify investment opportunities in Indonesia.

In particular, the MoU aims to unlock a wide range of opportunities for sustainable development projects in Indonesia.

Source: INA

JAPAN

Nippon Life Insurance and global asset manager DWS have extended their strategic alliance for five years from 11 March 2023.

Alliance initiatives include identifying funds which each company and its affiliates will seek to distribute in their respective distribution channels as well as introducing more DWS’ exchange-traded fund options for Japanese investors.

Closer collaboration in the areas of insurance advisory and solutions for Nippon Life’s subsidiaries, as well as third-party clients, is also among initiatives included in the strategic alliance agreement first signed in March 2018.

Source: DWS

KOREA

National Pension Service (NPS) said it will vote against the appointment of former Shinhan Bank President Jin Ok-dong as the new chairman of Shinhan Financial Group, the nation’s second largest financial giant in terms of total assets.

NPS holds a 7.96% stake in Shinhan Financial Group as of December 2022. 

It remains to be seen whether the NPS’ opposition will affect Jin’s appointment as it comes after the Institutional Shareholder Services, the voting advisory firm, advised investors to vote for Jin’s approval.

The NPS in 2020 also voiced concerns against former Shinhan chief Cho when he sought his second term, but his reappointment was approved by other shareholders at the time.

Source: The Korea Herald

National Pension Service (NPS) has become more active in exercising its voting rights at shareholder meetings of companies it invests in after the adoption of the stewardship code in 2018, a study shows.

Leaders Index, a corporate data researcher, analysed the shareholder meetings of 216 listed companies that belong to large business groups from 2020 to 2022 and studied the cases in which the NPS exercised voting rights.

Over the three years, 4,768 agendas were dealt with at 737 regular and ad-hoc shareholder meetings, and the NPS voted against 577 motions, or 12.1% out of the total. Only 24 motions, or 4.2% of them, were voted down in the end. The analysis showed that the NPS voted against 16.1% of the entire motions last year, up 6.9 percentage points from 9.2% in 2020.

Source: Maeil Business News Korea

Nineteen Korean insurance companies, or one-third of total insurers in the country, have asked the Financial Supervisory Service to postpone implementation of the Korea Insurance Capital Standard (K-ICS).

The standard is for soundness assessment in which both assets and liabilities are calculated on a present value basis. The 19 companies consist of 12 life insurance companies, six non-life insurance companies, and one reinsurance and surety insurance company.

The insurers said the new insurance risk measurement method is being implemented too soon. 

Source: BusinessKorea

MALAYSIA

Prime Minister Anwar Ibrahim said that further Employees Provident Fund (EPF) withdrawals will affect the country’s finances and decrease dividends.

The pension fund recently revealed that two million members aged between 40 and 54 have less than RM10,000 ($2,229) in their accounts.

Source: Malay Mail

Sovereign wealth fund Khazanah Nasional announced the launch of the Future Malaysia Programme, an initiative under its Dana Impak mandate.

Dana Impak is a US$1.34 billion (RM6 billion) commitment over five years and is a key pillar under Khazanah’s Advancing Malaysia strategy.

The strategy is designed to invest across six themes including digital society, quality health and education, work and social mobility, food and energy security, building climate resilience and competing in global markets.

Source: Digital News Asia

PHILIPPPINES

The Sandiganbayan, a special court, has sentenced three former officials of the Government Service Insurance System (GSIS) to up to 20 years in prison over the grant of 293 million Philippines pesos ($5 million) in housing loans to unqualified borrowers.

The anti-graft court’s Seventh Division found GSIS Tarlac City former division chief Celestino Cabalitasan, former appraiser Ma. Victoria Leonardo and former senior general insurance specialist Jerry Balagtas liable for violating anti-graft regulations.

The Sandiganbayan is a special appellate collegial court in the Philippines that has jurisdiction over criminal and civil cases involving graft and corrupt practices and other offenses committed by public officers and employees.

Source: Philippine Star

TAIWAN

Taiwanese financial institutions are not highly exposed to financially troubled Credit Suisse, the Financial Supervisory Commission (FSC) said amid mounting concerns over the local financial sector's overseas exposure.

Taiwan's banking, insurance and securities sectors have NT$157.3 billion ($5.14 billion) of exposure to the Swiss bank, with the insurance sector having the highest exposure of NT$108.2 billion as of the end of January, data from Taiwan's top financial regulator showed.

The insurance sector's exposure was not significant, however, because it represented only 0.35% of the insurance sector's total usable funds, the FSC said.

Source: Focus Taiwan

REST OF THE WORLD

Ontario Teachers’ Pension Plan Board (Ontario Teachers’) has recorded a one-year total-fund net return of 4% for the year ended December 31, 2022. The return exceeded the fund’s benchmark return of 2.3%.

The net assets of the Canadian pension fund grew to C$247.2 billion (US$180.9 billion), making continued progress toward its goal of C$300 billion (US$219.6 billion) in net assets by 2030.

“Our relative investment performance in 2022 was impressive, as many public equity and fixed income indices experienced double-digit losses during the year. We were also able to maintain our fully funded status again for the 10th straight year, which will allow us to operate from a position of strength in the near term in markets that we expect to remain volatile,” said Ontario Teachers’ president and chief executive officer Jo Taylor in a statement.

Source: Ontario Teachers’