As part of the efforts to deepen Nigeria’s capital market, the Association of Securities Dealing Houses of Nigeria (ASHON) has renewed the call for increased investment of Pension Fund Administrators (PFAs) in the market.
The association urged the government to utilise the market to raise long term funds to finance the budget in the areas of infrastructure projects, just as it frowned at the current re-introduction of Value Added Tax (VAT) to capital market transactions.
The total assets under the PFAs management is believed to be at N5 trillion. Of the amount, only 12 per cent is invested in equities and 15 per cent is invested in debt instruments while 70 per cent is held in Federal Government bonds and Treasury Bills.
However, an ongoing reform of PFAs’ functions is expected to address the imbalances in the investment policies of the administrators.
Responding to media enquiries, ASHON’s Chairman, Chief Patrick Ezeagu, explained that the capital market needed to be deepened in order to increase its absorptive capacity while noting that this should be one of the areas where the PFAs could be deployed to strengthen the market.
According to him, the assets held by PFAs largely have long term tenor, they are desirable on the stock market in a win-win situation. He also advocated the need for more enlightenment on the benefits of increasing asset allocation of PFAs to the capital market.
Ezeagu said, “The way forward is to encourage and educate the retail investors to continue to believe in the fundamentals of the market (the corporate earnings) and also to implore PENCOM to direct the PFAs to increase their holdings in equities as a matter of policy, being long term securities . Since their business model is long term in nature”.
Commenting on the risk aversion measures for investors in the capital market, Ezeagu explained that existing and potential investors should contact stockbrokers, the Securities Dealers for sound professional advice, and each investor will receive peculiar advices based on the outcome of profiling and the immediate market circumstances to buy.