Nigeria pension contributors to reap big as bourse pension index gains 54% year-to-date

Pension contributors are in for a big harvest this year as data from the Nigerian Stock Exchange (NSE) indicate that Nigeria’s pension index recorded gains of 54.07 percent year-to-date, meaning that overall pension contributions have significantly grown in value within the year.

The bourse’s weekly report for the week ended July 28, 2017, shows that pension index finished strong, year-to-date, coming behind the banking index, which surged 68.74 percent from January to July.

The development in the pension index is a reflection of the overall performance of the market, which gained over 30 percent, year to date with all-share index berthing at 36,864.71 points and market capitalization reaching N12.705 trillion.

All other Indices finished positive in the period under review with the exception of the NSE ASeM index that depreciated by 2.34 percent.

The pension index consists of a group of 40 stocks, which meet the requirements for pension funds investment in the country. The NSE Pension Index values were exposed to the investing public two years ago. Then the NSE explained the creation of the index was to encourage the development of other products such as Exchange Traded Products (ETP’s) and Index Futures.

The index specifically closed the week ended July 28th with a gain of 6.1 percent, gaining about 7.8 percent in July alone. Most of the stocks included in the pension fun index include stocks in the banking sector, oil and gas, insurance and industrial sectors. It also includes stocks in the consumer goods sector of the economy.

Nigerian stocks all-share Index have gained over 31 percent this year alone, making it one of the best performing stock exchanges in the world this year. From a total market cap of about N9.1 trillion at the start of the year, the Nigerian stock market has gained over N3 trillion in market value closing at N12.7 trillion as at last Friday.

For Nigeria’s over seven million pension fund contributors, the bullish run in the stock market translates to a likely increase of the value of their pension funds contributions.

Pension Funds in Nigeria are only allowed a global portfolio limit of about 25 percent for investing in shares only. It is therefore likely that most of the pension funds would likely report increased capital gains this year.

The NSE detailed report for the week indicated that a total turnover of 2.211 billion shares worth N30.636 billion in 26,287 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 3.628 billion shares valued at N34.886 billion that exchanged hands last week in 19,834 deals.

The Financial Services Industry (measured by volume) led the activity chart with 1.735 billion shares valued at N19.044 billion traded in 14,626 deals; thus contributing 78.45 percent and 62.16 percent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 165.396 million shares worth N454.240 million in 1,400 deals. The third place was occupied by consumer goods industry with a turnover of 135.802 million shares worth N6.681 billion in 4,143 deals.

Trading in the top three equities namely – United Bank for Africa Plc, FBN Holdings Plc and Access Bank Plc. (measured by volume) accounted for 798.334 million shares worth N7.165 billion in 5,855 deals, contributing 36.11 percent and 23.39 percent to the total equity turnover volume and value.