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 


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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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