Foreign pension funds may soon get more leeway
Shares down 15% since start of the year; latest crash comes after three-year pact between Opec & Russia ended in acrimony
Deep reforms are on the anvil in the country’s pension market, with plans to permit foreign pension funds to set up independent pension trusts and make the Pension Fund Regulatory Development Authority (PFRDA) the sole authority to allow a pension product into the market. This could entail a thorough rewrite of the pension products that insurance companies and some mutual funds offer today in the fastexpanding market for retirement products in India.
These are part of some 30 changes that the finance ministry is planning to bring in by amending the PFRDA Act of 2013. The amendment will also involve a change in the name of the regulator. Instead of ‘Pension Fund Regulatory Development Authority’, the regulator will be known as Pension Regulatory Development Authority.
The word ‘fund’ will be deleted from the name because, as a government source explained, “The regulator is in charge of the entire pension sector and not just of the funds. The new name will reflect this position better.”
The amendments will also help to attract more foreign investors, who are now allowed to invest upto 49 per cent in the sector. Though government officials have often talked of plans to raise this limit to 74 per cent (in tandem with the insurance sector), the straitjacket of the pension rules is seen as a dampener.
Shares of Saudi state oil company Aramco slumped below their i nitial public offering (IPO) price on Sunday for the first time since they began trading in December, after Organization of the Petroleum Exporting Countries’ (Opec’s) pact with Russia to restrict oil supplies fell apart.
Aramco shares closed 9.1 per cent lower at 30 riyals ($8.00), their sharpest one day percentage fall, and below the IP O price of 32 riyals. The Saudi market closed 8.3 per cent lower.
Aramco’s record IP O in December gave it a market capitalisation of $1.7 trillion, making it the world's most valuable company.
The deal was the culmination of Crown Prince Mohammed bin Salman’s efforts to open up the energy giant to outside investors and raise funds to help diversify the economy away from oil.
But buyers of the shares were largely Saudi retail and institutional investors as the deal found little i nterest beyond the Gulf.
The stock hit an intraday high of 38.70 riyals on its second day of trading, but has eased since then.
The shares have fallen more nearly 15 per cent since the start of the year amid concerns the coronavirus outbreak will slow oil demand from China and hurt the global economy.
Oil prices have also slumped, and fell further on Friday after a three-year pact
between Opec and Russia aimed at supporting the market ended in acrimony when Moscow refused to back deeper production cuts. Opec responded by removing all
limits on its own production.
“Aramco is under pressure because of the failure of the deal,” said Marie Salem, head of institutions at Daman Securities.