BPOPF assets soar past P90bn but ‘bumpy road’ beckons
Mbongeni Mguni | Monday August 15, 2022 06:00
The fund had grown to P93 billion by December last year, before retreating to P90 billion at the end of the financial year due to instability in invested markets.
“From April to now, we have had pressures such as higher global inflation and it’s a bumpy road going forward, but these are temporary,” Botswana Public Officers Pension Fund (BPOPF) CEO, Moemedi Malindah told journalists recently. “It should not be a cause for panic even though it’s about levels that have not been seen in a long time.”
Malindah noted that in previous periods of difficulties, any downtrend in the BPOPF’s investment performance had been better than in other markets.
“In 2009 with the global recession, the fund went down to P23.4 billion (from P27.9 billion) while others such as NASDAQ lost trillions of dollars. “With COVID-19, the fund was down one percent, but the market, in general, lost about $4.3 trillion. “Between January and May this year, there has been a lot of reduction because of the Ukraine situation and inflation pressures, and so far the market where we are invested has lost about P7.6 trillion, but we have not lost that much,” he said.
Russia’s invasion of Ukraine in February and global supply chain disruptions have disrupted global markets and raised fears of either a strong economic slowdown or even recession worldwide. However, even before the Ukraine turmoil and the higher global inflation, Big Tech stocks, in which the BPOPF is strongly invested, took a tumble in the first quarter of the year.
Global tech giants such as Facebook, Microsoft, Google, Netflix, and Amazon all shed value in the first quarter of the year in a period marked by a general sell-off in the market. Facebook, owned by Meta Platforms, saw a 34% drop in its share price, while Netflix fell by about 38%. Google-owner Alphabet, Amazon, and Apple posted relatively modest declines of between 3.5 percent and 1.5 percent.
The Big Tech investments had anchored the BPOPF’s investment returns in 2020 and 2021, helping assets perform beyond the general downturn caused by COVID-19.
According to Malindah, for the year to March 2022, growth in assets was led by unlisted investments, which include the BPOPF’s stakes in entities such as Mascom, Bona Life and others. The value of assets in the unlisted investments portfolio rose by 30.9% in the year to P7.7 billion, with Mascom up to P726.9 million and Bona Life growing to P96.4 million.
The value of local equities equally grew robustly in the year by P2.4 billion, which the CEO said was a testament to the efforts of citizen asset managers.
“We believe that the skill set in Botswana around investment management is very deep that Batswana managers can run these asset classes and give these returns to the country,” he said. “We believe the companies we have invested in can grow from here and beyond our borders.”
The BPOPF holds approximately 35% of the equities listed on the Botswana Stock Exchange, ranging across the spectrum of the most prominent firms in the country.