In the first three months of 2024, pension fund managers in Nigeria purchased Nigerian stocks worth N550 billion, reaching a historic total exposure of N2.32 trillion in equities by the end of March. This surge marks a significant increase from N1.77 trillion recorded in December 2023, according to data from the National Pension Commission (PenCom).
The rise in equity investments contributed to a 31 percent uptick, accounting for 11.79 percent of the Pension Fund Administrators’ (PFAs) total portfolio in March 2024, up from 8.97 percent in December 2023. Despite aggressive rate hikes by the Central Bank of Nigeria (CBN), with benchmark interest rates rising by 600 basis points to 24.75 percent, the stock market thrived, achieving a year-to-date return of 39.84 percent in the first quarter of 2024, the second-best return in Africa.
Oguche Agudah, CEO of the Pension Fund Operators Association of Nigeria (PenOp), attributed the growth in pension assets to various factors, including the surge in domestic and foreign ordinary shares. The bullish run in the Nigerian Exchange Group (NGX) contributed significantly to the increase in the value of domestic listed equities, while the devaluation of the naira led to the revaluation of foreign assets, further boosting pension fund assets. Despite the stellar performance of listed equities, fixed-income securities also played a significant role in driving the surge in pension assets.
Source: Buisness Day