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World’s Biggest Pension Fund Loses $64 Billion

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Pension

The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments.

The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain.

The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style. Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds.

“Short term market moves lead to gains and losses, but over the 14 years since we started investing, the overall trend is upwards,” Hiroyuki Mitsuishi, a councilor at GPIF, said at a press conference in Tokyo. “Don’t evaluate the results over the short term, as looking over the long term is important.”

Passive Investments

GPIF had 39 percent of its assets in Japanese debt at Sept. 30, and 21 percent in the nation’s equities, according to the statement. That compares with 38 percent and 23 percent three months earlier, respectively. The fund had 22 percent of its investments in foreign stocks at the end of September, and 14 percent in overseas bonds.

The retirement fund’s stock investments are largely passive, meaning returns typically track benchmark gauges. GPIF’s Japan equities slid 13 percent, the same decline posted by the Topix index, as China’s yuan devaluation and concern about the potential impact if the Federal Reserve raises interest rates roiled global markets. The fund lost 11 percent on its foreign equity holdings. Shares have rebounded since Sept. 30, with the Topix climbing 12 percent.

The fund can hedge its foreign-exchange risk if needed, Mitsuishi said, while declining to comment on whether GPIF had, or plans to start doing so.

Japanese Bonds

GPIF’s 0.6 percent return on Japanese debt compares with an 0.9 percent advance on a Bloomberg gauge of the nation’s sovereign bonds during the period. The fund’s foreign debt investments lost 1.3 percent during the quarter, as the yen strengthened 2.2 percent.

GPIF hadn’t posted a quarterly loss since the three months through March 2014. The most recent results included returns from a portfolio of government bonds issued to finance a fiscal investment and loan program, with GPIF providing such figures since 2008. If those are stripped out, the drop was the fund’s third-worst on record, exceeded only by declines in the depths of the 2008 global financial crisis and the aftermath of the Sept. 11, 2001 terror attacks.

Norway’s sovereign wealth fund lost 4.9 percent in the third quarter, with equity investments sliding 8.6 percent, its manager said on Oct. 28.

The Canada Pension Plan Investment Board delivered a 1.6 percent gain in the same period, with the fund’s President Mark Wiseman crediting diversification across assets and geographies for the result. It held about 51 percent of its portfolio in public and private equities, 29 percent in fixed income and about 20 percent in real estate and infrastructure investments.

“Compared to our past portfolio, swings in returns have become wider,” Mitsuishi said. “But in the long-term view, we see there’s less risk of failing to meet pension payouts with the new portfolio.”

Bloomberg

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Finance

CBN New Policy Boosts Nigeria’s Economy and Increases FX Reserve to Over $40 Billion

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Dr. Olayemi Michael Cardoso

In celebration of one year in office, the Central Bank of Nigeria (CBN), under the leadership of Olayemi Cardoso, has recorded another milestone with an over $40 billion increase in Nigeria’s foreign exchange reserves.

The announcement of the increase was made on Thursday by Cardoso during a symposium in Abuja titled Promoting Stability in an Era of Economic Reforms: The Journey So Far.

It was noted that the increase followed a policy of reform implemented by the administration of Cardoso as the CBN Governor to address Nigeria’s decade-long challenges with declining foreign direct investment and portfolio investments. 

It was gathered that, to further strengthen the nation’s economy, the CBN increased monthly foreign remittances to $1 billion by establishing new operational guidelines for Bureau de Change operators.

“According to Governor Cardoso, the reforms have started to yield positive results, including marked improvements in the FX market and a stabilization of foreign reserves, which have now surpassed the $40 billion mark, the highest in 33 months,” the statement read.

“While noting that inflation remains elevated, he said it is on a downward trend, signaling that the reforms are taking hold in restoring market equilibrium and fostering growth,” the statement added.

Additionally, the CBN had raised the Monetary Policy Rate by 850 basis points to 27.25% and also increased the Cash Reserve Ratio for commercial banks to 50%.

It was gathered that the previous administration had created arbitrage opportunities and discouraged foreign investment. 

In a way to correct these issues, the present administration has streamlined Nigeria’s foreign exchange system and eliminated multiple exchange rates to reduce delays in foreign exchange settlements and prevent revenue losses that had reached 6.2 trillion Naira in 2022. 

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Banking Sector

NDIC Issues Fresh Directives to Unpaid Heritage Bank Customers, List Requirements for Refund

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The Nigeria Deposit Insurance Corporation (NDIC) has issued fresh directives to customers of the defunct Heritage Bank who are yet to receive the refund of their money deposited in the bank.

The managing director of NDIC, Bello Hassan, through the director of communications and public affairs, Nuhu Bashir, issued the fresh directive during the corporation’s ‘special day’ event at the 36th Lagos International Trade Fair.

Urging unpaid customers to come forward, Hassan said that the requirements needed to claim a refund include the customer’s BVN, proof of account ownership, and alternative account details.

He detailed that affected customers can process their claims via the NDIC website, email, and social media platforms.

Highlighting the corporation’s role in liquidating Heritage Bank and facilitating the ongoing recovery and refund of depositors’ funds, Hassan stated, “Depositors who are yet to receive their payment should come forward with their BVN, proof of account ownership, identification, and alternative account details.”

NDIC reaffirmed its commitment to protecting depositors and ensuring financial stability.

“Our mandate is to safeguard depositors and ensure financial stability,” he stated.

Hassan assured customers that banks that are still in operation are safe saying, “All banks with active licenses from the CBN are safe and healthy,” Hassan said.

He pledged the corporation’s commitment to providing a safe and stable financial environment for Nigerians.

According to him, a stable financial environment will boost public confidence in financial institutions and enable businesses to thrive.

He stated, “The NDIC is committed to ensuring a stable financial environment that safeguards depositors and builds public confidence, enabling businesses to thrive and contribute to our nation’s economic development.”

Gabriel Idahosa, the president of the Lagos Chamber of Commerce and Industry (LCCI) praised the NDIC for its vigilant monitoring of banks and its proactive intervention in distressed institutions.

Idahosa said, “The corporation’s vigilant monitoring of banks, proactive intervention in distressed institutions, and ongoing commitment to depositor protection have instilled confidence in the banking sector.

“These ensure that banks can continue to serve businesses and individuals even in uncertain economic times.

“Its unwavering commitment to depositor protection and financial stability has been vital in navigating recent economic challenges and safeguarding the integrity of Nigeria’s banks.”

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Zenith Bank Commends Customers After Successfully Unveiling Upgraded Enhanced Tech infrastructure

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Zenith Bank - Investors King

Zenith Bank Plc has announced that it now boasts the best technology infrastructure in the banking industry, positioning itself to provide an exceptional customer experience and superior service delivery moving forward. This upgrade follows a recent comprehensive technology enhancement.

The bank expressed its heartfelt gratitude to customers for their support and patience throughout the upgrade process, while also extending apologies for any inconveniences experienced during this time.

This announcement was made in a social media post on Wednesday, signed by Dame Dr. Adaora Umeoji, OON, the Group Managing Director/CEO.

In her message, the GMD/CEO emphasized the bank’s commitment to delivering an unparalleled service experience, stating, “We undertook this upgrade to ensure we can offer our customers the best possible service.”

Umeoji pledged that Zenith Bank will continue to innovate, ensuring that customer needs are met swiftly, safely, and conveniently.

The post read in part: “On behalf of the Board, Management, and Staff of Zenith Bank PLC, I would like to thank you for your patience and support during our IT infrastructure migration to a new and more robust operating system.

“We are truly grateful for the trust and confidence you have placed in us. The primary reason for undertaking this extensive endeavor was to better position Zenith Bank PLC for improved service delivery to all our valued customers and to create memorable banking experiences at all our touchpoints.

“While I regret the inconveniences and challenges you faced during and immediately after our migration, I am pleased to inform you that Zenith Bank PLC now has the best technology infrastructure in the industry. We are committed to ensuring you experience superior service delivery going forward.

“Rest assured, you remain our top priority, and Zenith Bank will continue to innovate and offer value-added products and services to meet all your banking needs quickly, safely, and conveniently.”

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