Weekly Digest: CDPQ halts China investments; AustralianSuper freezes new PwC contracts

Jul 15, 2023

TOP NEWS OF THE WEEK

Caisse de dépôt et placement du Québec (CDPQ), has put the brakes on its investment in China, making it the latest western investor to pull back from the country amid rising geopolitical tensions.

"We paused private investments for some time already – and have focused on liquid markets, which is the majority of our 2% total portfolio exposure to China. We expect this trend to continue," the pension fund said in a statement to AsianInvestor.

CDPQ will continue to lead its regional investment efforts from Singapore, an FT report said, noting that it still has business interests in China.

British Columbia Investment Management Corp, which invests in real estate through its QuadReal Property Group, has also said it decided to pause further investments in China.

Five of the largest pension funds in Canada were questioned in late May on their exposure to China by a parliamentary committee of the Canadian government as tensions between Beijing and Ottawa escalate.

Sources: CDPQ, FT

OTHER INVESTMENT NEWS

AUSTRALIA

CareSuper and Spirit Super have entered into a binding agreement to merge, set to finalise by late 2024.

The combined superannuation entity will have A$50 billion in funds under management (FUM) and serve over 500,000 members, a June 1 joint statement said.

The combined entity will be chaired by Linda Scott, current chair of CareSuper and Jason Murray, currently CEO of Spirit Super, will become CEO of the combined fund.

The merger set to take place in late 2024 and the two super funds confirmed that nothing will change for the members of both funds until that time.

The announcement follows CareSuper and Spirit Super entering into a non-binding Memorandum of Understanding (MoU) to explore a possible merger in November last year.

Source: SpiritSuper

Australia's largest pension fund will pause use of the domestic unit of auditor PricewaterhouseCoopers (PwC) as the "big four" firm reels from a national scandal over its use of confidential government tax plans to drum up work with global clients.

The roughly A$290 billion ($196.71 billion) fund, AustralianSuper, has frozen new contracts with PwC and expressed concerns about the scandal "at the highest level", according to a spokesperson.

An audit contract worth A$1.6 million in 2022, will be reviewed this year, the spokesperson added. The fund spent A$700,000 on non-audit services last year, according to filings.

Source: Reuters

INDIA

India's insurance regulator ordered the takeover of a unit of Sahara India Life Insurance by SBI Life Insurance following the company's "continuous deterioration of financial position".

The Insurance Regulatory and Development Authority of India said the life insurance business of Sahara India Life will be transferred to SBI Life with immediate effect.

SBI Life clarified that there will be a transfer of Sahara India Life's policyholder assets and liabilities, but no merger between the two entities.

Source: Reuters

JAPAN

The California Public Employees' Retirement System (CalPERS) and the Office of the New York City Comptroller have voted against the re-election of Toyota Motor's chairman Akio Toyoda, shareholder voting records showed, sharpening the focus on the automaker's annual meeting later this month.

The pension funds also voted for a resolution urging Toyota to improve disclosure of its lobbying on climate change, according to postings by the funds. Two leading proxy advisory firms last week raised issues about governance at the automaker.

The disclosures by the public pension funds, both of which have records for activism, underscore the pressure Toyota faces at its annual meeting on June 14 over board oversight and its strategy of pushing electric vehicle (EV) alternatives, including hybrids like the Prius.

Source: Reuters

Japan's biggest life insurers have ramped up their use of longer-dated currency hedges to a record to escape sky-high costs, which suggests they are buying riskier securities that benefit from protection.

Currency swaps protected more than 11% of overseas securities owned at the end of the fiscal year to March, according to earnings reports from nine of the largest life insurance companies analysed by Bloomberg.

These contracts tend to last over the expected lifetime of an investment, making them especially useful for those which carry more risk.

They also reflect how they have dialed up their risk tolerance to deal with the constraints of a domestic bond market crippled by Bank of Japan's yield-control policy.

Source: Bloomberg

Three additional insurance companies, including Japan's Tokio Marine and MS&AD Insurance, have left a United Nations-backed net-zero climate alliance, leaving the group with about half the number of members it counted two months ago as insurers take fright at U.S. political pressure.

Tokio Marine is no longer listed as a member on the Net-Zero Insurance Alliance's (NZIA) website.

MS&AD Insurance in a statement on Monday it was leaving less than a year after joining. It said it would "continue our journey to achieve Net-Zero by 2050" with stakeholders.

Spain-based Grupo Catalana Occidente said in a statement it was withdrawing and that it believed it could "continue the path of advancing our sustainability objectives individually, outside the Alliance."

Source: Reuters

KOREA

The National Pension Service (NPS) plans to raise the ratio of its alternative investments and buy less debt as part of its long-term goal to boost profitability.

According to its five-year asset allocation plan finalised at a fund management committee on Wednesday, NPS will invest 55% of its total assets in stocks, 30% in bonds and 15% in alternative assets during the 2024-2028 period.

The new mid-term asset allocation plan compares with this year's target: 46.2% for stocks, 40% for bonds and 13.8% for alternatives.

The ratio of stocks will increase by 8.8 percentage points and that of alternative assets will rise by 1.2 percentage points from the end of 2023. Bond investments will decline by 10 percentage points.

Source: Reuters

The National Pension Service (NPS) achieved a 6.4% return on investment during the first quarter of 2023, recovering some 73% of the loss made in 2022, according to its preliminary report on May 30.

The world's third-largest pension fund manages W953.2 trillion ($718.9 billion) in assets as of end-March. It earned W58.4 trillion in profits in the first three months of this year.

In the January-March period, the pension fund posted 12.4% and 9.7% returns on domestic and overseas stocks, respectively. Its local and foreign bond investments respectively achieved 3.3% and 5.4% returns. Alternative investment logged a 3.5% return.

Source: Korea Economic Daily

MALAYSIA

Sun Life CEO and president Kevin Strain said that he is confident of the insurer's continued growth potential in Malaysia as the firm rides high on its strong bancassurance and banca-takaful distribution sales.

The company, which recently celebrated 10 years in the Southeast Asian nation, has tripled its market share since its inception in 2013. It now serves over 1.2 million clients in Malaysia.

Source: Insurance Business Mag

PHILIPPINES

The Maharlika Investments Corp. (MIC) is expected to be fully operational before the end of the year, Finance Secretary Benjamin Diokno said.

Diokno said In a briefing late last week Maharlika Investment Fund (MIF) Act of 2023 is expected to be signed by President Ferdinand R. Marcos Jr. before his second State of the Nation Address in July.

Maharlika is the new sovereign wealth fund created by the government.

Source: Philippines News Agency

SINGAPORE

GenZero, an investment platform company founded by Singapore's Temasek and focused on accelerating decarbonisation globally, has participated in a $50 million funding round for CleanJoule, a US-based startup focused on producing more cost-effective sustainable aviation fuel.

Other investors part of the consortium include Indigo Partners, Cleanhill Partners, Frontier Airlines, Wizz Air and Volaris.

SAF is expected to contribute up to 65% of the reduction in emissions needed by the aviation sector to reach net zero by 2050.

Source: GenZero

German industrial gases company Messer said that Singaporean sovereign wealth fund GIC has invested a minority stake in the business as part of a strategic partnership.

The proceeds from the investment will be used to help Messer take full control of its Messer Industries joint venture, financing the acquisition of shares from previous minority shareholder CVC Capital Partners.

Messer will become the sole owner of Messer Industries.

Source: GIC, Reuters