Category Archives: BUSINESS

GPIF said to be ¥10tr up in Q3, start peformance fees in 2018


The Government Pension Investment Fund will begin introducing performance fees for mandates awarded to active managers of both domestic and foreign stocks and bonds from the start of the next financial year on 1 April 2018, according to a story in the Nikkei.

The newspaper report also includes an unattributed statement that GPIF “earned a record quarterly return of more than 10 trillion yen in the October-December period, thanks to the global stock market rally” though it has not yet announced its results for the quarter.

The Fund plans to create the new fee structure “after meeting with each of the 50-plus companies that manage actively managed funds for the pension giant. Such factors as their investment styles and targeted returns will be taken into account when setting the fees.

“Under the new system, funds that achieve their predetermined investment return target will receive a similar level of fees as they receive now. If the actual return exceeds the target, however, they will be paid progressively more in proportion to the results.

“Missing the target will lead to lower fees, but even then, the payment will be comparable to the fees paid to passively managed funds sitting on a similar amount of assets. Investment returns will be evaluated using a time frame of three to five years, rather than looking at short-term returns.

“Actively managed Japanese stock funds used for GPIF assets did not earn their keep over the past decade, with their investment returns undershooting index growth by 0.04 percentage point despite the funds being paid higher than passively managed funds. The GPIF hopes performance-linked fees will change this around.

‘”We want to motivate fund managers to improve their investment management capability,” President Norihiro Takahashi said.’”

It would be nice if the Fund were to recognise in 2018 that when it makes information selectively …continue reading


Office tower to replace residential project in Roppongi Itchome

Sumitomo has started construction on a 7-storey, 46 meter tall office building located directly east of Sumitomo’s 216m tall Izumi Garden and across the street from the 27-storey Park Court Roppongi Hilltop apartment building. The office tower will have a total floor area of 7,910 sqm (85,000 sq ft) and is expected to be completed by January 2019.

Original plans were for a 102m tall, 29-storey apartment building with completion scheduled for April 2019. The land was originally the site of the Homat Governor rental apartment building, which was demolished in 2016.

There has been a growing trend over the past few years for developers to switch residential projects to office or hotels, since commercial properties can provide better returns. This has created a shortage in the supply of new residential construction in the city center.


1-5 Roppongi, Minato-ku, Tokyo

Source: Nikkei Business Publications, December 8, 2017.

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Upgrading PLA hardware and ‘heartware’ in the Xi Jinping Era

Authors: James Char and Richard A Bitzinger, RSIS

In the period leading up to the recently concluded 19th Chinese Communist Party (CCP) congress, civil–military relations in post-reform China had been viewed under the lens of Party–army relations. But more recently, following Xi Jinping’s consolidation of Party–state–military power, such a paradigm no longer seems true, and some People’s Liberation Army (PLA) watchers are alluding to a shift towards a new model of Xi Jinping–PLA relations.

Notwithstanding that the PLA has supported its commander-in-chief in his consolidation of power to attain reach his present unassailable position, the extent to which the CCP’s coercive forces can count on China’s new paramount leader to fully translate his considerable political clout into the PLA’s growing professionalisation is open to debate.

Soldiers of the People’s Liberation Army Marine Corps are seen in training in Zhanjiang, Guangdong province, China, 20 July 2017 (Photo: Reuters/Stringer).

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The general trend of the PLA’s latest modernisation drive has seen it initiate a nascent transition from an unwieldy Soviet-style model of ‘command and control’ to a more network-centric force that emphasises the networked linkages between platforms as opposed to the platforms themselves.

Even if it is still too early to gauge whether the PLA will successfully transform into a modern and network-enabled force capable of projecting power across the Asia Pacific, the reforms instituted by Xi in his capacity as chairman of the Central Military Commission (as …continue reading


Norges Bank acquires 132.5 billion Yen in real estate in Omotesando/Harajuku in JV

Norges Bank Real Estate Management (NBREM), part of Norway’s sovereign wealth fund, will acquire a 70% stake in a 132.5 billion Yen (approx. 1.17 billion USD) portfolio of real estate in Tokyo along with partner Tokyu Land. This is NBREM’s first investment in Asia.

The five commercial buildings are all located in Tokyo’s fashionable Omotesando / Harajuku district. The total retail and commercial floor area of the buildings is around 12,300 sqm, representing a sale price of approximately 10 million Yen per square meter, or 8,200 USD per square foot. The buildings are The Ice Cube, The Iceberg, The Jewels of Aoyama (tenants include La Perla and Anya Hindmarch), the neighboring Cinnamon (Marc Jacobs) and the V28 Building (Zara and Gold’s Gym).

Asset management will be entrusted to Tokyu Land Capital Management, with property management to be entrusted to Tokyu Land SC Management.

Ryutsu News, December 7, 2017.
The Nikkan Kogyo Shimbun, December 8, 2017.
Tokyu Land Corporation News Release, December 7, 2017.
Norges Bank Investment Management News Release, December 7, 2017.

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Steady Q2 for business and allocations at Tokyo fund managers


Tokyo’s asset management firms enjoyed a steady second quarter, figures from the Japan Investment Advisors Association show, with mandates in issue up 1.3% to 7,319 and assets under management rising 3.0% to 2,285,192 billion yen with a good part of that gain coming from rising stock markets at home and abroad. Text continues below table

The numbers for domestic mandates cover mostly pensions business but that segment accounts for only around 6% of the business from abroad. Text continues below table

At the close of the quarter on 30 September each mandate in issue covered an average of 312.2bn yen in assets but the wide difference remains between those awarded by public pensions (including the Government Pensions Investment Fund which handles the contributions of the populace to the national basic pension) and those from company-based schemes.

Each public mandate represented assets of 201.9bn yen at the end of the term compared with 6.2bn yen for each private mandate. However the fees on the former are wafer-thin.

Asset allocation also held steady with a slight rundown of amounts in ‘short-term’ investments except for those in Asia which rose mightily but from a very low base.

© 2017 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the (text continues below table).

secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long …continue reading