Sigma Pensions Limited has assured its customers of competitive returns on their pension assets notwithstanding the threat of N3 trillion excess liquidity on investment returns in the second half of the year.
Chief Investment Officer Sigma Pensions, Mr. Pabina Yinkere stated this at a Sigma Pensions webinar where he spoke extensively on the investment climate in Nigeria, Impact of Covid-19 on Pensions Returns and the way forward.
He said: “If we look at treasury bills and bonds that are going to mature over now to December period is over N5 trillion worth of maturities which are things that we have invested in and would be paid back to us in cash. So, to keep the investments going, we have to re-invest this into the market.
And if we look at the federal government borrowing for this year, they plan to borrow N2 trillion in total. So, with N5 trillion against N2 trillion, you can see that there would be a lot of money (N3 trillion) left uninvested or if invested at all, the demand for investment would become very high and it would then affect returns going forward.”
Further speaking on the likely impact of the above development on the stock market, he said: “If we then look at the stock market, the Nigerian stock market is highly correlated to oil prices. As we have seen decline in the oil price over this year following the advent of COVID-19, you would see that the market hasn’t done very well.”
“However, because of the share size of liquidity, there is a scope that this market would probably not decline as much as one would have expected but then what it still means is that because companies are going to be facing challenges and having troubles with growing revenue and making profit, equity investment may not be very attractive long-term opportunities at this time.”
Assuring customers of Sigma Pensions on the safety of their pension assets with the company, Yinkere said: “Because of the way the pension scheme has been run and operated, you would find that from the PENCOM investment regulation, it provides some level of security in and around pension instrument.”