Nambawan Super Limited (NSL) continues to look at opportunities to mitigate the adverse effects of a very volatile global economy as some of the Fund’s investments struggle to cope amid the tough economic challenges in 2022.
NSL’s Chief Executive Officer, Mr Paul Sayer explained, “NSL employs an investment strategy that aims to diversify risks by running a balanced investment portfolio. This is done with a view to protecting Members’ savings from threats of losses from the kinds of volatility seen in the current environment”.
“The Fund maintains around 20% of our portfolio in offshore investments and around 80% in local investments. This year has been the ‘perfect storm’ in terms of challenges faced by investors both locally and internationally.”
“NSL has seen our investments come under pressure due to a combination of high inflation, supply chain disruptions, rising fuel and energy prices, the introduction of the Additional Company Tax on the BSP Financial Group, rising interest rates from Central Banks globally but falling yields on local fixed income investments, and the risk of recession for many of the World’s leading economies”.
“As an economy that imports most of what it consumes, PNG is grappling with imported inflation resulting in an increase of the Consumer Price Index (CPI) by 5.5% in the June quarter of 2022 with the full year projection at 6%.”
“The high rate of inflation has raised the cost of living putting a strain on many local businesses and ventures, including those that the Fund has invested in. As a result, this will impact Members’ returns”, Mr Sayer added.
A recent report from the Australian Financial Review showed that other super funds around the region are also facing significant downgrades in their investment earnings with some facing the prospect of declaring negative returns for their Members.
Returns for the average balanced super fund slipped to an average loss of nearly 5%, with the worst performer losing 11% during the past 12 months to the end of August, according to analysis by research group Rainmaker. – Australian Financial Review
Mr Sayer explained, “While the Country is starting to experience an economic upturn, NSL has seen the value of our offshore investments reduce by approximately K250 million due to the drop in equity market values”.
“However, as the market prices decrease, this could be an opportune time for investors to take advantage of the lower prices of high-value international stocks to generate long-term returns once the global markets recover. The Fund will look at these opportunities as and when Foreign Exchange is made available to the Fund”, Mr Sayer added.
Mr Sayer stated that despite the current tough economic conditions, Members shouldn’t be disheartened.
“Superannuation is a long-term investment that will continue to generate returns for Members throughout their working life”, he added.
“NSL will continue to manage the short-term market volatility and make investments that create jobs, support PNG’s economic growth and deliver strong returns for our Members and their families over the long-term”, Mr Sayer concluded.