Amid attractive returns, the Pension Fund Administration (PFAs) exposure in domestic stocks and Nigeria Treasury Bills (NTBs) increased by 48.04 per cent in its Year-on-Year (YoY) growth to N3.35 trillion in May 2025 as against N2.26 trillion May 2024.
This according to data released by the National Pension Commission (PenCom).
The latest data by PenCom revealed that PFAs exposure in domestic stock market and Treasury Bills have seen significant growth in one year, impacting on net value that closed May 2025 at N24.11 trillion, up by 19.2per cent or N3.88trillion YoY from N20.23 trillion May 2024.
A breakdown of the numbers revealed that PFAs stake in domestic stock market appreciated by 45.1per cent YoY to N2.75 trillion in May 2025 from N1.89 trillion in May 2024, while stake in Treasury bills closed May 2025 at N604.6 billion, about per cent 63.35 per cent YoY from N370.12 billion declared by PenCom May 2024.
The combined PFAs investment in domestic stock market and treasury bills have contributed about 13.9 per cent of the N24.11trillion net assets value as of May 2025.
Analysts have attributed PFAs increasing exposure in stock market to increasing fundamentals of some listed companies, stressing that modest yield and risk-free government securities continued to influence PFAs exposure in Treasury bills
The likes of Nigerian Treasury Bills in 2025 has witnessed significant patronage by investors with yield over 20 per cent on one-year auction.
Local and foreign investors seem to respond positively to the double-digit interest rates on NTBs, as seen in the robust subscription rates, suggesting confidence in the Central Bank of Nigeria (CBN) ability to manage the country’s monetary challenges amid scarcity of foreign exchange and double-dight inflation rate.
Meanwhile, the participation by PFAs in the stock market in the first five months of 2025 lifted the market capitalisation by N7.7 trillion or 12.3per cent when compared to N62.763 trillion it closed for trading in 2024.
In the five months under review, Nigeria’s inflation showed signs of easing, currently at 22.97 per cent amid its rebased National Bureau of Statistics (NBS) as Gross Domestic Product (GDP) growth projections were revised upward by key stakeholders.
So far this year, CBN has continued its monetary policy tightening to stabilise the naira and inflation.
Under Dr. Olayemi Cardoso of the CBN, Nigeria economy has seen gradual clearance of the foreign exchange backlogs and heh has restored stability into the foreign exchange market as he had reassured both local and foreign investors from day he resumed duty.
Listed corporate earnings on NGX also played a pivotal role with major fundamental companies declaring impressive earnings in the first quarter ended March 2025 and others migrated to profit generation.
The Treasury bills yields in Nigeria remained high through May 2025, with average yields in the 19-221 per cent range. The primary driver was excess liquidity paired with monetary policy aiming to stabilize inflation expectation.
Analysts believe PFAs are benefiting from the undervalued stocks amid the weakening of the Naira and renewed investors’ confidence in the Nigerian stock market.
They expressed that the PFAs and domestic investors reacted sharply to naira depreciation in the foreign exchange market, double-digit inflation rate, coupled with the CBN’s hike in MPR currently at 27.50 per cent.
The analysts further stated that the pension industry has been recording significant growth in recent years, following several regulatory reforms by PenCom, which has seen the number of PFAs in the industry reduce as a result of some mergers and acquisitions.
Speaking, the Vice President, Highcap Securities, Mr. David Adnori said the pension Industry operates under stringent regulations due to the nature of handling public funds, primarily the contributions of workers meant for their retirement.
According to him, PenCom enforces guidelines and limits to ensure the safety and security of contributors’ funds as restrictions are placed on PFAs regarding the allocation of contributors’ funds into volatile assets.
“This cautious approach is in line with the need to protect contributors’ savings and ensure that they have a secure and reliable source of income during their retirement years. To achieve this, the PFAs adopt a mix of fixed and variable assets in their investment portfolios. This diversified approach takes into consideration the risk tolerance of contributors and the different fund categories within the pension system,” he said.
Responding to PFAs exposure in the stock market, Investment Banker & Stockbroker, Mr. Tajudeen Olayinka explained that PFAs and investors reacted to low prices of some fundamental stocks on the exchange.
According to him, “Prices had become too low to resist, and this happened because of prolonged repricing of securities across markets and instruments, pushing down stock prices below the levels they should ordinarily be.
“It also demonstrates improved earning capacities of some listed companies, as they continue to adjust to variability of costs and cost pressures in the short run, in order to stay afloat. Another factor is the usual positioning and repositioning for year-end rally by investors, as some companies begin to show strong earnings’ prospects ahead of full year results.”
