Pension industry forex-denominated assets surge

FOREIGN currency-denominated assets for the pension industry surged 42% to close the third quarter of 2023 at US$326 million, NewsDay Business can reveal.

This was driven by the major asset classes of equities, money market investments and prescribed assets.

In a third quarter pensions report, Insurance and Pensions Commission (Ipec) said equities constituted 47%, prescribed assets (20%) and money market investments (9%) during the period.

“This was compared to the major asset classes as at 30 September 2022 which were equities, prescribed assets and money market investments constituting 29%, 22% and 15% respectively,” the Ipec report read in part.

“The comparison shows that equities investments increased by 18% while money market investments decreased by 6%. The holding of foreign currency-denominated assets helps in cushioning the asset from being eroded by inflation in the current hyperinflationary environment.”

In nominal terms, the industry saw a 1 027% increase in total asset base, closing the quarter at ZWL$10,62 trillion. During the period, the industry’s assets were concentrated in investment properties and quoted equities which constituted a combined 76% of the industry’s total portfolio.

“Investment property constituted 55% of total assets compared to 47% for the same period last year. This indicates the industry’s investment preference of the asset class. The industry’s assets are concentrated in investment properties and quoted equities, which constituted a combined 76% of the industry’s total portfolio,” Ipec noted.

“There was a nominal increase of 1 270% in investment property. On the other hand, quoted equity investments decreased from 28% to 21%, notwithstanding the nominal increase of 782%, following the bearish trend in the stock market.”

During the period, investments in unquoted equities increased by 1 097% from ZWL$39 billion to ZWL$472 billion as its share to total assets remained constant at 4%. Ipec said it would continue monitoring the valuation of private equity investments to ensure consistency and comparability within the industry.-newsday