Nambawan Super Limited’s (NSL) Executive Management team recently attended an interview with NBC Radio to inform Members of the current state of the Investment Markets and how this is currently affecting the Fund and other local investors.
NSL CEO, Mr Paul Sayer opened by stating that: “From an investment and economics point of view, 2022 has been the perfect storm for investors like Nambawan Super”.
“Globally we are seeing a high inflation environment brought on by supply chain disruptions, rising fuel and energy prices due to the Russia-Ukraine War, and rising interest rates from Central Banks. The combination of all these factors makes the risk of a global recession a very real possibility”, he added.
“PNG is unfortunately not spared from these tough economic conditions as we are also impacted by high inflation, expected to be between 6% – 8% for 2022.”
“The high local inflation is a result of our reliance on imported goods which as a result has raised our local cost of living putting a strain on many local businesses and slowing our Country’s economic growth.”
“Nambawan Super is working hard to maximise our profits and minimize potential losses against the backdrop of these challenging economic conditions”, Mr Sayer remarked.
Mr Sayer also noted that NSL is affected by these unfavourable conditions on both fronts with nearly 20% of its investments in global markets and over 80% dependent on local investments.
“Currently we have seen the value of our offshore investments reduce by approximately K250 million due to the drop in equity market values. If the markets do not recover, then our Members can expect a 3% – 4% lower crediting from these changes in value alone”, Mr Sayer added.
“We are also expecting short-term volatility meaning there will be significant increases and decreases in the international equity markets, however in the past, our investments in the international markets have proven invaluable in providing good returns for our Members.”
“As such, over the long term, we intend to stay invested as we anticipate the global markets to recover and continue generating good returns.”
“Locally, the Fund is also expecting losses in revenue and dividends resulting from the Dominant Player Levy imposed on the BSP Financial Group, restrictions on SP Breweries’ sale of alcohol during Covid-19 and the 2022 General Elections, and the reduction of interest on State securities which we expect will reduce interest income by at least K50 million this year.”
“In addition, the State owes the Fund K160 million for the rental arrears accumulated over nearly three years by the various State tenants. The State last week, made the first payment of K52 million towards settling these arrears.”
“We are currently working with the State to have the remaining arrears settled before the close of the year so as to not further hurt the returns to our Members”, Mr Sayer stated.
Mr Sayer continued advising that despite the current tough economic conditions, Members shouldn’t be disheartened as superannuation is a long-term investment that will continue to generate returns for Members over the duration of their working life.
“Over the last 10 years, we have delivered a 7% average interest rate to our Members despite having a handful of tough years. I encourage our Members to be confident that your savings will continue to grow with Nambawan Super as we have proven ourselves to be PNG’s most consistent superannuation fund throughout our 60 years of service to the people of PNG.”
“We are cautiously optimistic that these unfavourable economic conditions will be alleviated as PNG’s oil and gas sector expands over the next decade if projects like Papua LNG, Wafi Golpu, Pyang Yang are progressed.”
“We are also looking forward to improved investor confidence and a predictable fiscal policy environment as the returning Marape-Rosso Government works to return political stability in PNG.”
“In the interim, Nambawan Super is continuing to review our Investment Strategy with careful consideration for investment risks and returns to ensure our Members’ funds are managed responsibly.”
“We continue to make investments that create jobs, grow the economy and create a conducive environment for you and your family’s future.”
“We encourage Members to talk to us about how super is a long-term investment and to register for our free Financial Literacy Training to help you prepare for a better retirement”, Mr Sayer concluded.