JPM JP Morgan Chase and Co

J.P. MORGAN

Exchange Returns Bank-Backed Deal

The Hong Kong Stock Exchange cast some potentially unwelcome attention on J.P. Morgan Chase & Co. after the exchange returned a Chinese company's application for a spinoff.

The Wall Street bank is the first global investment bank to be named on a list of sponsors for deals in Hong Kong whose application regulators turned away. The public disclosure of returned listing applications started in 2014 and is part of an effort by the stock exchange to boost transparency and make investment-bank underwriters more accountable for listings.

Hong Kong's stock exchange returned an application by Shenhua Health Holdings Ltd., a small pharmaceutical arm of Hong Kong-listed Fufeng Group Ltd., for a spinoff on March 29, according to the exchange's website last updated in late April.

The application was sent back due to disclosure problems, said a person familiar with the situation, who didn't provide further details. J.P. Morgan was the listing's sponsor -- the bank responsible for the company's listing. Shenhua Health has the option of resubmitting its listing application eight weeks after its first attempt.

The Hong Kong stock exchange has returned listing applications from eight companies since it started disclosing such information.

--Kane Wu

METLIFE

Investment Cutback in Hedge Funds Set

MetLife Inc. is sending out notices of redemption to many of its hedge-fund managers, joining American International Group, which earlier this year said it was scaling down the amount of money it has in hedge funds.

MetLife, the nation's biggest life insurer by assets, said at its earnings call that it would shrink its roughly $1.8 billion allocation to hedge funds by an estimated $1.2 billion over the next couple of years down to around $600 million. The exact figure will depend on market performance between now and then.

In announcing earnings on Wednesday, MetLife said hedge funds had delivered weak performance, and, on the call, investment chief Steven Goulart elaborated to say hedge-fund returns "actually were negative for the quarter."

He said MetLife has experienced inconsistent hedge-fund returns over time, with "up and down years... so that's our reason for pulling it out." He said the insurer believes the market environment will "continue to be challenging for hedge funds" at a time when MetLife wants "cash-flow predictability," so the company "decided that we're going to continue reducing our hedge-fund portfolio."

Mr. Goulart noted that MetLife redeemed about $600 million of hedge-fund investments last year.

The company will remain invested with "our most consistently performing managers," he said.

Life insurers heavily favor high-quality bonds when investing the premiums paid by customers, but some spice up their portfolios with a slice of riskier fare. MetLife's hedge-fund slice is less than 1% of its overall investment portfolio, it said.

MetLife's comments come on top of an update from AIG during its Tuesday quarterly conference call that it has so far gotten back about $1.2 billion from hedge funds, as the insurer seeks to cut by half its exposure to these holdings by the end of 2017. AIG is slimming down from $11 billion of hedge-fund holdings as of Dec. 31.

MetLife shares fell 1.7% to $42.81 on Thursday.

--Leslie Scism

(END) Dow Jones Newswires

May 06, 2016 02:47 ET (06:47 GMT)

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