Omega Ukama 
EQUITY holdings of Zimbabwe’s pension funds and insurers grew by 126 percent to $77 billion during the first quarter of 2021, latest regulator reports show.
In comparison, the ZSE’s market capitalisation grew by 71 percent to close the period at $543 billion.
The industry’s share of this was 15 percent, up from 10 percent at the end of 2020, when the market capitalisation was $317 billion.
The Insurance and Pensions Commission (Ipec) said this implies “that the industry remains critical to the development of the country’s stock market”.
It comes as analysts have said investors should continue to lean towards real assets as inflationary pressures have not yet entirely subsided.
Over the past decade, investors in the country have cultivated bias for real assets such as stocks and property, amid high inflation, which peaked at 838 percent last July.
And while the economy has seen some stability since the Reserve Bank of Zimbabwe introduced weekly currency auctions last June, inflation remains high at 162 percent as of May.
“We recommend maintaining a bias towards investment in real assets, namely listed equity markets and alternative investments that can earn real returns,” First Mutual Wealth (FMW) said in a recent note.
Investment property and quoted equities accounted for 72 percent of pension funds’ total asset base of $177 billion as at March 31, 2021, according to Ipec. Of this, quoted equities were $55 billion.
FMW said property remains attractive for long term investors, “while money market investments need to remain at the short-end while ensuring the yield is from high yielding paper that can minimise the losses from inflation uncertainty”.
According to Ipec, fixed properties and equities constituted 64 percent of the life assurers’ total assets of $48 billion at the end of the quarter under review. The sub-sector’s quoted equity holdings closed the period at $20 billion.
Total assets for short-term insurers increased by 29 percent to $11 billion as at March 31, 2021.
“The increase in assets was mainly attributable to an increase in equities, investment in properties and equipment and premium debtors,” Ipec said.
Equities increased by 91 percent to $2,21 billion.
“The increase in equities is mainly attributable to equity prices tracking inflation,” the regulator said.
Meanwhile, the sub-sector’s investment in properties and equipment had a nominal increase of 28 percent to $2,82 billion during the period.
Ipec said this increase was mainly because of revaluation.
Annual inflation in January 2021 increased to 363 percent from the December 2020 figure of 349 percent mainly attributable to adjustments of electricity, fuel and rates at the beginning of the year, but stability was maintained during the rest of the quarter as inflation decreased to 241 percent in March.
