Monday, March 8, 2021
  • About Us
  • ImagiNATION
  • Adverts
  • Rate Card
  • Contact Us
The Nation Online
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
No Result
View All Result
Home Business Business News

Where do we invest pension funds?

by Grace Phiri
28/03/2019
in Business News, Front Page
4 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

Financial market analysts have called for government’s deliberate policy to ensure that a huge chunk of pension funds are invested in infrastructure development if the country is to maximise returns.

In an interview on Tuesday, one of the market analysts, Benson Jere, who is also chief executive officer (CEO) of NBM Capital Markets Limited, observed that a huge allocation in interest bearing assets is not healthy, especially now that interest rates are low, leaving limited scope for pension funds to accrue good returns.

RelatedHeadlines

RBM sues Mulli, 4 others

Chakwera hosts first foreign President

Local traders, consumers go for smuggled goods

graph1 | The Nation Online

He urged the need for a deliberate policy to promote property development through pension funds and promotion of small and medium enterprises (SMEs) through development bank financing to boost small firms and later have them registered on the Malawi Stock Exchange (MSE).

This, Jere said, could increase diversification on the 14-counter local bourse.

“The regulator of the fund should have a deliberate policy that should force fund managers to reinvest most of the pension funds into infrastructure development.

“Property should have been higher than the government debt and equities. The problem is that we are vulnerable because of limited stocks on MSE which as well limits diversification,” he said.

Reserve Bank of Malawi (RBM) statistics indicate that as at December 31 2018, investment in listed equities continued to dominate the asset portfolio mix at 39.5 percent while asset allocation in government securities remained constant at 34.2 percent.

Unlisted equity, which included private debt, fixed deposits and property, on the other hand, were at 5.3 percent, 8.1 percent and 3.9 percent, respectively.

Total investment income increased to K132.3 billion in December 2018 from K122.7 billion in December 2017.

Income realised from investments for the second half of 2018 increased to K51.5 billion from K25.6 billion earned during the corresponding period in 2017, lower than the K80.8 billion earned in the first half, due to negative returns of the stock market, particularly in the fourth quarter of 2018.

However, unrealised gains, however, still accounted for 57.8 percent of total income, according to RBM.

Another market analyst, Armstrong Kamphoni, said in an interview on Tuesday that listed equities tend to grow over the long-term, but are also subject to short-term fluctuations .

He observed that pension fund managers may not have many alternatives to invest in; hence, they will remain in government debt.

“Government debt has to be safe unless there are extenuating circumstances. If sovereign debt is no longer safe, then you have a problem.

“The only observation is that most of the government debt might be short-term and may not match the long-term liabilities,” said Kamphoni, who is CEO of Cedar Capital Limited.

On his part, market analyst Cosmas Chigwe said listed equity are riskier investments, but these are invested through seasoned fund managers who know how to manage the risk.

He said the local equity market is not connected to outside markets, as such there is little risk for external shocks.

“The one class of assets that we could worry about there would be the private debt considering the relatively high non-performing assets ratio in Malawi,” he said.

But MSE operations manager Esnart Suleman said though equities have higher risk compared to other investments, the risk can be diversified and managed through stock selection based on in-depth research and analysis.

She said: “When investing pension fund money, fund managers are ideally supposed to match the liability profile to the right assets. In terms of risk, every asset class has a level of risk and is impacted by the macro-economy.

“Actually with interest rates going down, the stock market is the best avenue to invest for good returns.”n

Previous Post

When dirty money puts economy at risk

Next Post

Build your corporate stature

Related Posts

Mulli: The chiefs chose Kaduya
National News

RBM sues Mulli, 4 others

March 7, 2021
To hold a closed-door meeting: Masisi
National News

Chakwera hosts first foreign President

March 6, 2021
Some of the smuggled products at a shop in Mchinji
Business News

Local traders, consumers go for smuggled goods

March 6, 2021
Next Post

Build your corporate stature

Opinions and Columns

Search Within

Cut out the religious dogma from Covid-19 vaccines

March 7, 2021
Big Man Wamkulu

Won’t libido-boosting pills kill him?

March 7, 2021
Political Uncensored

Pulling rank…

March 7, 2021
People’s Tribunal

Ombudsman has challenged us all

March 7, 2021

Trending Stories

  • Protesting pay cut: Mathanga

    Court blocks RBM deputy governor salary cut

    0 shares
    Share 0 Tweet 0
  • RBM sues Mulli, 4 others

    0 shares
    Share 0 Tweet 0
  • Police, DPP, ‘ignore’ court order

    0 shares
    Share 0 Tweet 0
  • Ministry plans to export 1m tonnes surplus maize

    0 shares
    Share 0 Tweet 0
  • Govt to finance 15 major projects

    0 shares
    Share 0 Tweet 0
  • Values
  • Our Philosophy
  • Editorial policy
  • Advertising Policy
  • Code of Conduct
  • Plagiarism disclaimer
  • Disclaimer
  • Privacy Policy
  • Terms of use

© 2021 Nation Publications Limited. All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation

© 2020 Nation Publications Limited. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.