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China regulator probes Ping An Insurance's property investments -sources – Financial Post

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SHANGHAI — China’s banking and insurance sector regulator is probing Ping An Insurance Group Co of China Ltd’s investments in the property market, two people with knowledge of the matter said, after the firm took a big profit hit from a soured bet.

The China Banking and Insurance Regulatory Commission (CBIRC) has also ordered the insurer to stop selling alternative investment products, which are typically tied to the property market, said the people, who declined to be identified as the information is not public.

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Ping An in a statement said its real estate exposure was significantly lower than the regulatory cap. It did not respond to queries on the regulatory probe. The CBIRC did not respond to a request for comment.

The regulatory move comes after Ping An, the country’s biggest insurer by assets, in February disclosed https://www.reuters.com/article/us-china-developer-ping-an-of-china-debt-idUSKBN2A40HQ a 54 billion yuan ($8.4 billion) exposure to the indebted China Fortune Land Development Co Ltd.

Ping An made adjustments to its earnings figures including booking impairment provisions https://www.reuters.com/article/ping-an-results-idUSL1N2PX0KA of 35.9 billion yuan for investments related to China Fortune in the first half of 2021, which contributed to a 15.5% fall in its net profit in the January to June period.

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China Fortune, a developer of industrial parks and urban real estate, said it had overdue debt and interest worth 69.2 billion yuan as of June-end, and that default and liquidity stress could impact its operations and financing.

The regulatory probe into Ping An’s property portfolio also comes against the backdrop of Beijing sharpening its scrutiny of the country’s red-hot real estate market by tackling unbridled borrowing that has fueled concern about financial risk.

The government has been working to curb unregulated credit flows into the property market. And as new rules choke off shadow lending to developers, the squeeze is increasing the risk of default for some of the country’s biggest property players.

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The insurance regulator’s investigation into Ping An, the only insurer designated as systemically important, aims to uncover and contain risk connected to its property investment portfolio, said the people.

The insurer’s total real estate-related exposure is 185.5 billion yuan, weighing roughly equally on equities, debt and investment properties and accounting for around 4.8% to 4.9% of its 3.8 trillion yuan total investment portfolio, according to a Citi research note.

PROPERTY EXPOSURE

The regulator’s latest on-site probe into Shenzhen-based Ping An, whose shares are down more than 40% this year, started this month, said one of the people, adding the CBIRC has been requesting documents since earlier this year.

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Also, the CBIRC in February ordered the insurer to halt the sale of so-called alternative investment products, leaving dozens in a team set up for the purpose without work, they said.

Ping An’s other property investments include 14.1% of the shares in China Jinmao Holdings Group Ltd, 8% of Country Garden Holdings Co Ltd and 6.54% of CIFI Holdings (Group) Co Ltd, showed Refinitiv data based on company filings.

China’s insurers have been busy unwinding or cutting their exposure to developers this year, said two people who work at mid-sized insurance firms.

“All I’ve been doing is traveling to meet our different developer clients this year in different parts to China to tell them we can’t finance them anymore,” said one person who works at one of China’s top 10 insurance firms.

“We’re cutting our exposure as part of our internal strategy,” the person said. (Reporting by Engen Tham and Zhang Yan in Shanghai and Kane Wu in Hong Kong; Additioanl Reporting by Cheng Leng; Editing by Sumeet Chatterjee and Christopher Cushing)

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Big Pot wants millions in corporate investment — some lawmakers are happy to help – New York Post

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Last year, we saw pro-pot lawmakers attempt to load up any and every COVID-19 aid bill with marijuana industry wish list items. Though none of those attempts proved successful, they are back at it again.

Last week, Rep. Ed Perlmutter (D-Colo.) offered the SAFE Banking Act as an amendment to the annual military spending bill known as the National Defense Authorization Act, or NDAA. The NDAA is a must-enact defense spending bill that Congress has passed into law each year for 60 years in a row. Which renders Perlmutter’s move especially shady.

Outside of full, federal legalization, passing the SAFE Banking Act into law is the top priority of the marijuana industry. The bill would allow the industry access to the federal financial system, opening it up to take out loans, have FDIC-insured bank accounts and accept all major credit cards without having to resort to loopholes. But the real reason why this bill is so critically important to Big Pot is that it would finally allow pot companies access to institutional investment.

You see, there are currently billions of dollars sitting on the sidelines, waiting to be invested into the pot industry by major investment firms, hedge funds, pension systems and other major corporate interests. These interests, according to former House Speaker and pot advocate John Boehner, want to “dive head-first into cannabis.”

As it stands, the giants of Big Tobacco and Big Alcohol are deeply invested in the marijuana industry across our northern border in Canada. Altria, the maker of Marlboro cigarettes, invested $2 billion into Cronos, a Canadian weed company, while Constellation Brands, one of the largest alcohol conglomerates, pumped $245 million into another Canadian marijuana company, Canopy Growth.

But while these two giants of the addiction industry are unable to fully invest in American marijuana companies, their well-heeled lobbyists are working the halls of Congress, pushing for the SAFE Banking Act.

Rep. Ed Perlmutter offered the SAFE Banking Act as an amendment to the annual military spending bill.
AP Photo/David Zalubowski, File

The most direct, immediate result of this bill would be billions of dollars in investment flowing into pot companies that can then be spent on research and development of new, highly potent products and new marketing campaigns that will further normalize marijuana use and result in more youths using the drug.

As an aside, don’t be fooled into thinking the pot industry is marketing the 5-percent-THC pot smoked in the 1960s and ’70s. Today’s marijuana regularly contains upwards of 30 percent THC — the main, psychoactive compound — in flower and 99 percent THC in concentrates such as dabs and vaping oils. This new, high-potency pot has been linked to a litany of serious mental-health issues, such as anxiety, depression, schizophrenia and psychosis.

The pot lobby has promulgated lie after lie to convince lawmakers to support this bill. They say they are forced to operate as a “cash-only” industry due to the lack of conventional banking access. This has repeatedly been shown to be false, as many marijuana dispensaries readily accept card payment. Furthermore, the pot lobby claims that its (false) status as “cash-only” makes dispensaries a prime target for robberies. While it’s true marijuana dispensaries are oftentimes robbed, many such robberies are not after cash that is locked away in a backroom safe, but the marijuana products on the shelves.

Chemdawg marijuana plants grow at a facility in Smiths Falls, Ontario, Canada October 29, 2019.
The giants of Big Tobacco and Big Alcohol are deeply invested in the marijuana industry in Canada.
REUTERS/Blair Gable/File Photo

In short, the SAFE Banking Act is nothing more than the federal government signing off on corporate investment in the marijuana industry. And what’s worse, it could set the precedent for banking access to other industries that traffic in federally illegal substances. Former officials from the Carter, Reagan, Bush, Clinton and Obama administrations have even warned this bill could grant cover for criminal cartels to engage in money laundering.

To the point at hand, marijuana-industry banking access has absolutely nothing to do with the funding of our military and other national-security operations; the inclusion of this amendment is just another example of the desperation of the marijuana industry. The American people should reject these shady tactics and put kids before the pot industry.

Kevin Sabet, a former three-time White House senior drug-policy adviser, is president of Smart Approaches to Marijuana and author of “Smokescreen: What the Marijuana Industry Doesn’t Want You to Know.”

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Alibaba Nearing Investment in Singapore Unicorn Ninja Van – BNN

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(Bloomberg) — Ninja Van, a Singaporean logistics startup, is set to raise about $580 million from investors including Chinese e-commerce giant Alibaba Group Holding Ltd., according to people familiar with the matter.

Some of Ninja Van’s existing investors will also participate in the series E round, the people said, asking not to be identified because the matter is private. Those include B Capital Group, the venture capital firm set up by Facebook Inc. co-founder Eduardo Saverin and Raj Ganguly, a former executive at Bain Capital, and European parcel delivery company Geopost/DPDgroup, the people said.

The new funding round will help lift the company’s valuation to well beyond $1 billion ahead of a potential initial public offering as early as next year, the people said. 

Venture capital firm Monk’s Hill Ventures and Zamrud, an existing investor linked to a Southeast Asian sovereign wealth fund, are also participating in the round, the people said. Ninja Van plans to use the funds to better its infrastructure and technology, as it seeks to be cost efficient while improving the quality of its operations.

Representatives for Alibaba, B Capital, Geopost, Monk’s Hill Ventures couldn’t immediately be reached for comment by phone or email outside of normal business hours. A Ninja Van representative couldn’t immediately comment. 

Investors are betting on transportation, logistics and warehouse companies amid a boom in e-commerce, one of the beneficiaries of the coronavirus pandemic.

Founded in 2014, Ninja Van operates in six markets in Southeast Asia and delivers close to 2 million parcels a day in the region, according to its website. It raised $279 million in a series D round last year where participants included ride-hailing firm Grab Holdings Inc.

Ninja Van’s clients include PT Tokopedia, which has merged with ride-hailing giant Gojek to create GoTo, Indonesia’s most valuable startup, Alibaba’s Lazada Group and Shopee, a unit of Singapore-based Sea Ltd. The logistics startup also works with global consumer groups such as Unilever Plc and with smaller shops.

©2021 Bloomberg L.P.

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How can you best protect your investments if inflation continues to rise? – The Arizona Republic

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The accelerating pace of inflation is one of the main economic trends of 2021.

The Consumer Price Index or CPI, the government’s main inflation gauge, has ran around a 5% annual pace for the past several months, well above last year’s 1.4% rate and the 50-year average of about 3.9%.

Higher rates of inflation have the potential to erode the value of investment portfolios, reviving memories of the 1970s, when large U.S. stocks took it on the chin.

Various investment hedges can help blunt the damage, but the current inflationary trend might not last all that long — and you might already have sufficient protection. Before making any drastic moves into inflationary hedges, consider these issues:

Which assets hedge against inflation?

Various assets can help protect against inflationary spikes. TIPS, or Treasury Inflation Protected Securities, are one obvious example on the bond side. Gold and other tangible assets including real estate also have reputations as inflation hedges. Cryptocurrencies, too, might fit that role.

But during a Sept. 23 webinar on inflation protection hosted by investment researcher Morningstar, the panelists found common ground in a less-obvious area: The stock market.

“You’re buying shares in real companies that make real goods and services,” the prices of which tend to go up over time in an inflationary environment, said Catherine LeGraw, an asset-allocation specialist at investment firm GMO

Specifically, the shares of natural resource, commodity and real estate companies can fare well during inflationary periods. But other corporations can too, assuming they can pass along price increases to consumers.

In the Morningstar discussion, gold received relatively little attention, though Nic Johnson, a commodities portfolio manager at PIMCO, described the metal as an asset that you can expect to “keep pace with inflation over very long periods.”

The panelists spent little time on bitcoin and other cryptocurrencies, noting that they lack any fundamental value. If you invest in cryptocurrencies, LeGraw said, you had better hope that “the next guy will like them better than you do.” 

Do you need more protection?

Before making any adjustments, it’s worthwhile to take inventory of what you own in your investment portfolio. Oil and other energy stocks, mining enterprises, real estate companies and other traditional inflation stalwarts already are included in most broadly diversified mutual funds and exchange traded funds, though perhaps not in the weightings that you would like.

Energy stocks, for example, make up less than 3% of the broad Standard & Poor’s 500 index. So too for materials companies and those engaged in real estate. Contrast that with, say, nearly 28% of the index’s assets held in information technology stocks, 13% in health care and nearly 12% in consumer-discretionary companies.

For more punch, you might consider adding a bit more to inflation-protected assets such as natural resources or commodity companies, but be wary of overdoing it. As a general rule, allocating 10% or 20% specifically in these areas to an already broadly diversified portfolio likely would suffice, Johnson said.

Also consider the inflation protection offered by other assets you might have, such as a house or rental properties. And if you’re collecting Social Security retirement benefits, keep in mind that you can look forward to cost of living adjustments, making Social Security a decent inflation hedge. The Social Security Administration next month will announce the COLA for 2022.

Where is inflation heading?

Predicting the future direction of inflation isn’t easy. Despite occasionally alarming headlines, It’s possible that we have seen some of the highest numbers in this cycle already. Several long-term deflationary forces remain in place, from global trade and relatively inexpensive imports to the technological revolution, which continues to moderate costs for computing hardware and other goods and services.

America’s aging population also could contribute to disinflation, as older people tend not to spend as much on new homes, furnishings, vehicles, entertainment and so on (though more in other areas, especially health care).

The three Morningstar panelists were asked when we are likely to see CPI numbers drop and stay below 4% on an annual basis. Evan Rudy, a portfolio manager at investment firm DWS, said he expects that will occur in the second half of 2022, while Johnson and LeGraw anticipate it happening earlier.

The reopening of the economy from the COVID-19 pandemic has boosted inflation as consumers started buying things they had put off, from vehicles to air travel, and as more people re-entered the work force and were hired.

Supply chains continue to be stretched and that could continue well into next year. Prices for some items already are rising at double-digit rates, and retailers and others are warning of shortages for the holiday-shopping season.

Still, many of these pressures aren’t likely to be permanent. Johnson drew a parallel between recent inflationary increases and the start of a marathon. All the runners initially congregate in a small pen behind the starting line, he noted, but as the race unfolds, that congestion eases as runners spread out and find their own paces.

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Clues from the past and future

Past periods of high inflation weren’t all that common, and unique catalysts tended to spark each such incidence. Back in the 1970s, for example, the OPEC oil embargo pushed up energy and transportation costs, and wages were escalating at a brisk pace. There’s no such oil embargo currently, and a relative lack of collective bargaining and union strikes these days suggest that wage inflation isn’t likely to become rampant, LeGraw said.

“Do workers collectively have enough power to cause broad wage increases?” she asked. “Right now, workers lack that power.”

Bond investors could get hammered if inflation and inflationary expectations continue to rise and if interest rates creep higher, as seems plausible. Bond prices fall and yields tend to rise under such conditions. Yet prices are still high and yields remain near decades-low levels on Treasury securities and many other bonds, LeGraw noted, suggesting that investors don’t see these as long-term threats.

Federal policies also play a role. As an example, the push toward green energy and more electric-vehicle charging stations, as proposed under President Biden’s Build Back Better plan, could spark more inflation initially if those initiatives are enacted and construction projects get carried out, Johnson said. But the push to renewable energy could be disinflationary in the long run, he added, if it means cheaper energy eventually.

Reach the reporter at russ.wiles@arizonarepublic.com.

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