As of end March 2021, NAV of Croatian Mandatory Pension funds amounted to HRK 123.8bn.
Pension funds could be seen as the key player on the Croatian capital market, as their current domestic equity holdings account for more than 40% of the free float market cap of ZSE. NAV of pension funds has witnessed a steady increase for each consecutive month since April 2020, and as of end March stood at HRK 123.8bn (+13.9% YoY or HRK 15.14bn). To put things into a perspective, such NAV is converging very closely to the entire equity market cap of the Zagreb Stock Exchange (excluding PBZ – to be delisted). We note that such a high YoY increase could be attributed to a low base effect, given that pension funds noted a decrease of 3.3% MoM in March 2020 (turmoil on financial markets due to the outbreak of the pandemic).
Looking at the MoM performance, NAV of Mandatory Pension funds is up by 2%, its best performance so far in 2021. It is also worth adding that in March net contribution payments amounted to HRK 614.7m (+3.6% MoM).
Asset Structure of Croatian Mandatory Pension Funds (March 2020)
Source: Croatian Financial Services Supervisory Agency, InterCapital Research
Looking at the asset composition of pension funds, asset managers have not changed significantly their composition in Q1 2021, which can be seen in the graph above. Bonds account for the vast majority of total assets (64.6%) which as of end March amounted to HRK 80.7bn. We however note that bond holdings observed quite a high MoM decrease of 2.8% (or HRK 2.3bn), which arguably came on the back of increased concerns regarding potentially high inflation and rising interest rates.
Shares come next, with 19.2% or HRK 24bn, representing an increase of as much as 4.5% MoM (or HRK 1bn). The majority of that mentioned increase came from domestic equity (+4.3% MoM). Note that domestic equity accounts for 57.8% of total equity holdings.
Total Assets of Croatian Mandatory Pension Funds (2018 – Mar 2021) (HRK bn)
Source: Croatian Financial Services Supervisory Agency, InterCapital Research
