Weekly Digest: HKMA Exchange Fund results; KIC mulls Asia alts increase

TOP NEWS OF THE WEEK

The Hong Kong Monetary Authority Exchange Fund posted a HK$97.9 billion (US$12.5 billion)  return in the first quarter of 2023, marking two consecutive quarters of positive return after record losses in 2022, the city’s de facto central bank said.

Bonds and foreign exchange were the best performers, while stocks also contributed to the positive result.

The $HK97.9 billion first-quarter gain erased close to half of the fund’s total HK$202.4 billion losses in 2022.

Bond investment gained HK$43.9 billion in the first three months, up more than 72% compared to the last quarter of 2022. Foreign exchange gained via translating foreign-currency assets into Hong Kong dollar contributed HK$25.2 billion of return – 84% up from a year ago and six times higher than the last quarter.

Source: Hong Kong Monetary Authority 

Sovereign wealth fund Korea Investment Corporation (KIC) is considering expanding alternative investments in Asian emerging markets, CEO Jin Seoung-ho said at a meeting with journalists in New York.

“KIC is paying attention to the high potential in some Asian countries. With currency hedging strategies, we are particularly interested in India, Vietnam, Indonesia and other fast-growing economies in the region,” Jin said.

The sovereign wealth fund is also eyeing data centers and tech infrastructure in Japan, the CEO added. However, KIC will adopt a cautious approach to US public equity investments this year.

Source: Korea Economic Daily

AUSTRALIA

Westpac has completed the previously announced merger of BT’s personal and corporate superannuation funds with Mercer Super Trust and the sale of its Advance Asset Management business to Mercer Australia.

The merger and sale were first announced on 26 May 2022. Westpac expects to report an after-tax gain on the sale of Advance that will be disclosed as a notable item.

The merged fund manages approximately $43 billion (A$63 billion) in assets and has 850,000 members.

Source: Westpac

NEW ZEALAND

Spark New Zealand's subsidiary, Connexa, has received clearance to acquire the mobile telecommunications tower assets of 2degrees Mobile and 2degrees Networks from Macquarie Asset Management and Australian superannuation fund, Aware Super.

Connexa is currently owned by Ontario Teachers' Pension Plan Board (OTPP) as a majority shareholder (70%), and Spark New Zealand retains a 30% interest. Ontario Teachers' Pension Plan will provide the necessary funding, and its shareholding in Connexa will increase to around 83%.

Despite the dilution of ownership, Spark will retain certain governance rights, including board representation, and stand to benefit from expanding Connexa's business.

Source: MobileWorldLive; TelecomTalk

JAPAN

Real estate asset manager Hines has acquired five additional multifamily properties in Japan.

The 290 units deal was made by Hines Asia Property Partners (HAPP), the firm’s flagship commingled Asia Pacific core plus fund, and takes the total number of multifamily rental assets in its portfolio to 16.

Cadillac Fairview, the real estate investment arm of Ontario Teachers’ Pension Plan, is among the investors in HAPP.

Source: Hines

KOREA

The National Pension Service (NPS) will benchmark $1 billion in real estate allocations to a new FTSE Russell index that will include niche, non-core real estate sectors.

The FTSE EPRA Nareit Developed Extended Opportunities RIC 6/45 Capped Index was created in consultation with NPS and was added to FTSE Russell’s standard index series for other investors to access. The Index currently has 70 constituents across ten countries including Australia, Belgium, Canada, Singapore, the US and the UK.

The index selects developed REITs and non-REITs including data centers, self-storage, senior care, life science, timber, single family homes, manufactured homes, medical office buildings, student housing and office assets with specific tenant exposure.

Source: NPS, FTSE Russell

The Government Employees Pension Service (GEPS) is set to inject up to $120 million to private equity global buyout or growth strategy and has issued a request for proposals.

The pension fund is looking for two or three fund managers with at least 15 years of experience to manage up to $40million each.

The funds must allocate 80% or above to North America and/or Europe, and funds with a single sector allocation above 80% will be excluded.

Fund managers must have a total assets under management of $15billion, and the fund size should be $4 billion at final close. Deadline for proposal submission is May 17, with final selection in July.

Source: GEPS

The National Pension Service (NPS) recently reduced its stake in department store and liquor stocks, which are sensitive to slowing consumption, while increasing its shares in nuclear power and IT sectors.

NPS reduced its stake in Hyundai Department Store to 6.93% on April 4 from 8.03% in January and HiteJinro to 5.7% on April 28 from 9.29% last year, according to a regulatory filing April 3.

Stock market analysts see the move as NPS’s response to slowing consumption. 

According to market tracker FnGuide, four securities firms lowered their target prices for Hyundai Department Store and seven firms slashed their target prices for HiteJinro last month.

Source: Maeil Business News Korea

SINGAPORE

State investor Temasek is considering investing $100 million in Indian jeweller BlueStone for a 20% stake, two sources with direct knowledge of the matter told Reuters.

The investment would value Bengaluru-based BlueStone, also backed by venture capital firm Accel and Indian industrialist Ratan Tata, at close to $500 million, according to one source.

The potential deal could boost BlueStone’s plans to expand aggressively in India, the second-largest jewellery consuming nation behind China, as demand surges after the pandemic.

Source: Reuters

GIC has acquired a further 27% stake in The Railpool Group, one of Europe’s leading rail vehicle leasing companies for electric locomotives.

The purchase was made from from co-owner Palladio Partners, a German specialist in the field of global infrastructure investments.

The transaction makes GIC the majority shareholder in Railpool.

Railpool was founded in 2008, with GIC first investing in 2016. The company’s fleet of locomotives is 100% electric and operates a full-service leasing model.

Source: GIC

GIC has sold its 50% in R City Mall in Mumbai to joint venture partner, Runwal Developers, for 1,000 crore rupees ($122 million) with a four-time return on its initial investment.

GIC and Runwal Developers have been JV partners since 2006, while the mall has been operational for around 13 years. It was set up as a greenfield project and was among the very first deals in the real estate sector in the country attracting foreign direct investment.

Source: Business Line