EPF stock market investments slump to Rs.2.6 bln in 2015/16
View(s):Stock market investments by the Employees Provident Fund (EPF) fell sharply in 2015/2016 to just Rs.2.6 billion from a total of Rs.17.9 billion in 2012-2014, data released by the EPF has revealed.
The data was made available to Transparency International Sri Lanka (TISL) which had requested information from the Central Bank, which manages the EPF, via the Right to Information (RTI) Act. TISL released this information in a media release this week.
Whilst Rs. 5 billion, 8.1 billion and 4.8 billion, respectively, were invested in companies on the Colombo Stock Exchange (CSE) during the 2012-2014 period, these figures fell dramatically in the following two years. 2015 and 2016 saw investments in companies quoted on the CSE drop to Rs.1.3 billion each (total of Rs.2.6 billion) in both years, TISL said.
“This change in investment pattern made by the Central Bank coincides with the change of government in 2015. It is also noteworthy that government investments in listed equities account for only 4 per cent of the total portfolio, while investments in government securities constitute a significant 93 per cent of the portfolio,” the release said.
Huge investments of EPF in the pre-Yahapalana period have been widely criticised as investments in companies, some of which were showing negative returns. Analysts and opposition politicians (including Dr. Harsha de Silva) criticised the investments as ‘politically’ motivated and warned of negative returns to its stakeholders (EPF members).
The data showed that the EPF invested in stocks in nearly 60 companies in 2012-2014 while the number dropped to 14 in 2015-2016. TISL had requested information for a 5-year period 2012-2016 and provided a link http://www.rtiwatch.lk/wp-content/uploads/2017/04/epf.pdf which contains the entire EPF response. The Central Bank also had outlined the criteria used by the EPF to evaluate investment opportunities, and which illustrates the distribution of investments across the EPF portfolio.