Tuesday, January 22, 2019 1:23:43 PM- Nigerian Stock Exchange.

  Little change in PFAs’ asset allocation


The assets under management (AUM) of the Nigerian regulated pension industry increased by 23.8% y/y in March to N7.94trn (US$26.0bn). They are growing at a reasonable rate yet, at just 7.0% of 2017 GDP, are running well behind many emerging markets. Nigeria was relatively late (2004) in introducing legislation creating a sound structure for regulated pensions. If the industry is to come close to realizing its full potential, forward-looking leadership from the regulator and new products to extend coverage across the economy are required. 

The industry’s holdings of FGN paper amounted to 70.4% of their AUM in March, compared with 72.8% one year earlier. The beneficiary has been domestic equities, the share of which gained 2.0% over the 12-month period. 

The role of the PFAs in local debt markets remains pivotal. Their holdings of FGN bonds at end-March represented 44.3% of the stock of the instruments at end-December. 

PenCom’s latest data do not point to a surge of investment in domestic equities. The NSEASI rose by 62.7% in the 12 months to end-March while AUM in the asset class increased by 54.3% over the same period.

The decline in yields on FGN paper since mid-2017 could lead to a change in asset allocation by PFAs. The share of AUM invested in equities has risen but we are not witnessing a sea-change.

PenCom data as at end-December 2017 show a total of 7.89 million scheme memberships, implying an average portfolio of N950,000.
AUM of PFAs, Mar 2018 (% shares) Total: N7.94trn

News Headlines 

Nigeria loses N2.7bn daily to Trans Ramos pipeline shut-in: With the price of Brent crude oil at around US$75/b during the early trading hours of Monday, Nigeria is losing about N2.7bn (US$7.5m) daily, as the 100,000 barrels per day Trans Ramos Pipeline in the swamps of Western Niger Delta remain shut. The Shell Petroleum Development Company of Nigeria Limited (SPDC) confirmed four leak points on the 100,000 barrels per day Trans Ramos Pipeline at the weekend. (Source: Guardian) 

Discos fail to remit N112bn, says NERC: Power distribution companies failed to remit a total of N112bn (US$309m) to the Nigerian Bulk Electricity Trading Company and the Market Operator of the sector in the first quarter of this year. (Source: Punch) 

CBN funds 704,928 electricity meters, 500 transformers: The Central Bank of Nigeria (CBN) provided funds to power distribution companies for the purchase of 704,928 meters and for the acquisition and installation of over 500 transformers. The bank has also paid more than N24bn (US$66m) to gas suppliers and rehabilitated over 2,000 kilometres of 11kV lines and 130km of 0.45kV lines. The CBN said its intervention in the power sector was through the Nigerian Electricity Market Stabilisation Facility. (Source: Punch) 

MTN Ghana aims to raise nearly US$750m in IPO: MTN on Tuesday launched an initial public offering for a 35% stake in its Ghana business, which it hopes will raise 3.47 billion cedis (US$743 million). In what is expected to be the West African country’s largest IPO, telecoms operator MTN will sell about 4.63 billion shares in MTN Ghana at 0.75 cedis per share, group vice president Ebenezer Asante said. (Source: Reuters) 

ANALYSTS FROM FBNQuest Capital Limited.

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