PIC May Boost Investments Outside South Africa as Economy Slows

JOHANNESBURG (Capital Markets in Africa) – Public Investment Corp., which manages the bulk of South African government employee pensions, will consider further investments outside its home market as the continent’s most industrialized economy expands at the slowest pace since the 2009 recession.

“I would like to see more growth, and because of the tough economic environment in South Africa, that is a concern,” Chief Executive Officer Dan Matjila said in an interview in Pretoria on Tuesday. “One way to balance that is to diversify into non-domestic markets and into more unlisted investments, which are low risk and have a good return.”

PIC’s assets under management increased by 2.4 percent in the 12 months through March to 1.85 trillion rand ($135 billion), the lowest rate of growth in seven years. As the largest single owner of South African equities and holder of more than 42 percent of government debt and half of the notes issued by state-owned companies, PIC’s returns are being hurt by equity markets that are little changed over its fiscal year and losses in bonds.

South Africa’s economic growth slowed to 1.3 percent in 2015 and is expected to expand 0.1 percent this year, compared with a sub-Saharan average of 1.4 percent for 2016 that is also being weighed down by a potential contraction inNigeria’s gross domestic product, according to the International Monetary Fund. The two nations make up more than half of the sub-Saharan Africa’s GDP.

‘More Jobs’
“For a better performance, the catalyst is a better-performing economy and so we want to focus on investing in key growth areas such as agriculture, manufacturing and mining to some extent in order to save jobs,” Matjila said, without elaborating. “Better economic growth means more jobs and ultimately a better performance in our funds.”

PIC, which owns listed equities that account for about 12.5 percent of the Johannesburg Stock Exchange’s market value, holds almost 14 percent inEcobank Transnational Inc., the continent’s most geographically diverse lender, and also a stake in Dangote Cement Plc. It’s mandate allows the money manager to invest as much as 10 percent of its equities outside South Africa.

Source: Bloomberg Business News