• Privacy Policy
  • Terms
  • About us
  • Contact Us
Wednesday, May 18, 2022
  • Login
TheMattersPress
  • Home
  • News
  • Features
  • Special News
  • Thematterspress
  • Multimedia
    • Audio
    • Photo
    • Video
  • About us
  • Contact Us
No Result
View All Result
  • Home
  • News
  • Features
  • Special News
  • Thematterspress
  • Multimedia
    • Audio
    • Photo
    • Video
  • About us
  • Contact Us
No Result
View All Result
TheMattersPress
No Result
View All Result
Home Finance, Money

PFAs invest in stocks as new strategy

PFAs

The Matters Press by The Matters Press
February 10, 2022
Reading Time: 3 mins read
0
PENCOM launches radio programme

Pension Fund Administrators (PFAs) in Nigeria have shifted investments to stocks listed on the Nigerian Exchange Limited (NGX), among other Exchanges in 2021, as their exposure increase by 51.4 per cent in 11 months.
Analysts have expressed that the moves by the PFAs was in a bid to escape the unattractive yield environment that prevailed in the Treasury Bills (T-Bills) market in 2021.

RELATED POSTS

Osinbajo advocates African plan on energy transition

Buhari’s war against money laundering, financial crimes peaks

Stakeholders seek political will to revive textile sector

Investigation revealed that PFAs investment in stocks between January and November of 2021 was N9.48trillion, an increase of 51.4 per cent from N6.26trillion reported by the National Pension Commission (PenCom) between January and November of 2020.

The aggressive investments by the PFAs in the stock market impacted significantly on listed blue-chips companies and local investors outshining foreign investors on the bourse.

For instance, the stock market in 11 months of 2021 had gained N1.5trillion to N22.567 trillion from N21.063trillion it opened in 2021, while the NGX All-Share Index or ASI appreciated by 7.4 per cent to 43,248.05basis points to close at 40,270.72 basis points it closed in 2020.

ALSO READ  Parents submit Nigerian fraudster wanted by FBI to anti-graft agency

The stock market had closed at N22.30 trillion in 2021 after appreciating by N1.24 trillion.

The All-Share Index of the Exchange closed 2021 at 42,716.44 basis points, up from 40,270.72bps at the end of 2020.

According to NGX’s domestic & foreign portfolio participation in stock trading in 11 months of 2021, out of the N1.74trillion total trade, domestic investors traded N1.34 tillion or 77.07 per cent while foreign investors traded N399.18 billion or 22.93 per cent in the period under review.

The latest data obtained by THISDAY from PenCom revealed that PFAs exposure in the stock market reached its second peak in November 2021.

PFAs exposure in domestic shares dropped by 3.1 per cent Month-on-Month (MoM) to close at N876.45billion in November 2021 from N904.74billion reported by PenCom in October 2021, while exposure to T-Bills dropped to N274.99billion in November 2021 from N642.03billion in November 2020.

However, PFAs investment in T-Bills depreciated by 52.6 per cent to N5.49 trillion in 11 months of 2021 from N11.6trrillion in 11 months of 2020.

Checks revealed that the real return on the short-term instrument, (T-bill interest rate minus inflation), in 2021 stood at – 10.5 per cent, better than the -14.54 per cent reported in 2020.

ALSO READ  Free trade takes off, but is Africa ready?

After crashing to a four-year low of near-zero per cent in 2020, yields on the FG’s risk-free T-Bills jerk up to more than 17-month high of 9.75 per cent around May 14.

The rate, however, plunged to an 11-month low of 4.9 per cent at the last auction of 2021, as compiled from T-Bills’ primary market auction results for December 29, 2021.

Further analysis of the T-bill auction result for 2021 revealed that while interest rates on the 91-day and 182-day bills were mostly constant at about 2.49 per cent and 3.45 per cent, respectively in the review year, the longer 364-day reported the most decline, ending the year at 4.9 per cent.

According to analysts, investors’ interest in T-bills and consequently, the lower interest rate, has been largely due to their unwillingness to take a risk on longer-term instruments due to expectation of higher interest rates in 2022.

Further analysis showed that PFA’s total investment in FGN securities that include FGN Bonds, T-Bills, Agency Bonds (NMRC), Sukuk Bonds, Green Bonds and State Govt Securities rose by 11.8 per cent to N91.47trillion in 11 months of 2021 from N81.81trillion in 11 months of 2020.

ALSO READ  Buhari apologizes to restive Nigerians over excruciating petrol shortage, power blackouts

Analysts, however, have expressed mixed feels over the penetration of PFAs in the domestic stock market.

The regulation on Investment of Pension Fund Assets of February 2019 stated that: “A PFA may invest the pension fund assets of any one Fund in the ordinary shares of a listed company, subject to a maximum limit of 7.5 per cent of the issued share capital.

Cumulatively, in the six (6) Funds under the Multi-Fund Structure, a PFA shall not hold more than 20 per cent of the issued share capital of a listed company.”

CEO Pension Fund Operators Association of Nigeria (PenOp), Mr Oguche Agudah said: “The target is a guild not by force for PFAs to meet the 20 per cent requirement set by PenCom. I can decide to do five per cent and beyond but it is not necessary I meet the 20 per cent.

“So, it depends on the individual PFAs business strategies and what equities are available for them to buy. PFAs can’t just invest in any stocks. Their investment in equities is still huge relatively to other institutional investors in Nigeria.”

More=ThisDay=

Tags: PFAs
ShareTweetPin
The Matters Press

The Matters Press

Related Posts

Nigeria emerges Africa biggest energy sector
Economy

Osinbajo advocates African plan on energy transition

May 13, 2022
Nigeria gets petroleum law to edge out 50 years archaic laws
News

Buhari’s war against money laundering, financial crimes peaks

May 13, 2022
25 textile clusters get a boost through SMEDAN
Economy

Stakeholders seek political will to revive textile sector

May 12, 2022
Nigeria floats $4bn Eurobonds
Economy

DMO lists N225bn FGN bond for subscription by auction

May 12, 2022
Price of bread to be reviewed upwards again
Economy

Cost of bread beyond reach of many Africans – AfDB

May 12, 2022
Buhari meets with governors of APC
News

Buhari gives resignation deadline to political office holders seeking to contest elections

May 11, 2022
Next Post
Egypt’s economic strides excite AfDB

AfDB assesses Africa’s growth

AfCFTA’s potential for enterprises dominates discussion

AfCFTA, Afreximbank agree on base fund

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recommended Stories

Curfew in Nigeria

Democracy Day, Buhari tackling challenges

June 12, 2020
Nigeria, WFP worry over food situation

Global food trade increases by 14% – FAO

November 12, 2021
Fact Check on Trump’s Wall funding

Nigeria, U.S bi-national commission meeting

February 5, 2020

Popular Stories

  • 79 candidates for presidential election

    INEC wants to make you rich, bid for new jobs

    0 shares
    Share 0 Tweet 0
  • Universities approved to operate distance learning centres

    0 shares
    Share 0 Tweet 0
  • IMF’s reasons for Nigeria’s economic recovery

    0 shares
    Share 0 Tweet 0
  • Missing fighter jet found dead

    0 shares
    Share 0 Tweet 0
  • PawaPlus launches app to make access to electricity easy

    0 shares
    Share 0 Tweet 0
TheMattersPress

We bring you the best news update in Nigeria

LEARN MORE »

Recent Posts

  • Osinbajo advocates African plan on energy transition
  • Buhari’s war against money laundering, financial crimes peaks
  • Stakeholders seek political will to revive textile sector

Categories

  • Agriculture
  • Business
  • Culture
  • Economy
  • Economy
  • Entertainment
  • Features
  • Finance, Money
  • Foreign
  • Health
  • Lifestyle
  • Multimedia
  • News
  • Oil, Gas
  • Opinion
  • Photo
  • Politics
  • Politics/Social
  • Religion
  • Security
  • Special News
  • Sports
  • Tech
  • Thematterspress
  • Trade, Industry, Technology
  • Travel
  • Uncategorized
  • Video
  • World

© 2022 Domo Tech World - Powered by Thematterspress.

No Result
View All Result
  • Home
  • News
  • Features
  • Special News
  • Thematterspress
  • Multimedia
    • Audio
    • Photo
    • Video
  • About us
  • Contact Us

© 2022 Domo Tech World - Powered by Thematterspress.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Call Us
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?