Kazakhstan National Bank to continue investing pension assets in securities of developing countries - News | BNews

Kazakhstan National Bank to continue investing pension assets in securities of developing countries

28 February, 17:51 143
Kazakhstan National Bank to continue investing pension assets in securities of developing countries

Based on the analysis of macroeconomic indicators, more attractive countries in terms of investment, the countries that are in the global indices of bonds of developing countries will be selected.

The National Bank of Kazakhstan in 2018 continues investing pension assets, state securities in attractive countries in terms of investment, the press service of the financial regulator reported.  

“Owing to new strategic distribution of a foreign exchange portfolio, designed by the National Bank in 2017, investing of pension assets in the global stock index and indices of bonds of developing and developed countries. Based on the analysis of macroeconomic indexes, the more attractive countries in terms of investment, that are in the global indices of bonds of developing countries developed or tracked by JPMorgan and Merrill Lynch, are selected,” says the message distributed on Wednesday.

To date, according to the results of the analysis held for investing pension assets, 11 developing countries with sustainable macroeconomic indexes and credit ratings, that are in Southeast Asia, Latin America and Eastern Europe, were selected. In November, 2017, the National Bank started phased investing of pension assets in state securities of the Governments of Brazil, Mexica, Chili, Peru, Poland, Indonesia and other developing countries in dollars, says the information.  

In addition, for the index investing of pension assets, the National Bank will carry out the work on attracting of foreign managing companies that are world leaders in the professional asset management. Such companies have a high credit status and considerable work experience with financial tolls in which it is planned to invest pension assets.

“This investment strategy of a foreign exchange portfolio will not only ensure a proper level of safety and liquidity, but also will increase the rate of return of pension assets in the long run,” says the press release.

It is noted that temporary free pension assets in in a foreign currency are invested in short highly reliable financial tools, including deposits in foreign banks with a maturity of not more than 6 months. All foreign banks, where pension assets were deposited, have high rating assessments and are residents of economically developed countries of the world, such as Canada, France, Japan and others.

To date, short-term deposits in foreign banks have more attractive rates of return comparing to short-term securities of issuers with the same risk level, they believe in the National Bank.

At the same time, it was said in the Bank that in general such investments are not a strategic goal of investing and carried out within the management of the current liquidation to support the rate of return or pension assets.

We note that from the beginning of 2016, the approach to investing of pension assets of ENPF was changed. The National Bank started to increase the foreign currency portion of pension assets in order to diversify the portfolio. At the first stage, the amount of currencies received was invested to short-term financial tools of the high reliable foreign issuers.

Until 2016, the investment policy of pension assets of ENPF in the external markets was unbalanced. The high concentration of investment in securities of Kazakhstan’s issuers was observed. The volume of foreign investment was low and at a currency position in the amount of 17.0% comprised about 6.5% of pension assets.

In 2017, based on many years of experience in managing assets of the National fund and gold and foreign currency assets of the National Bank, a new strategy of investing the currency portfolio of pension assets was designed.

In turn, such a strategy implies investing pension assets based on the index management. In international practice, when investing assets, various indexes are used, that are developed and tracked by leading world financial organizations. In fact, an index is a set of financial tools, which meet certain risk parameters and profitability. Investors use indexes as reference portfolios, that meet their strategic goals and tasks.