POLAND - Poland's pension fund investments are at risk if domestic markets fail to keep pace with projected asset growth.
This is the conclusion of a report by Poland’s insurance and pension fund markets regulatory body, KNUiFE, which will be released at the end of July.
The report warns of the risk posed to pension funds if the domestic stock markets do not develop sufficiently.
KNUiFE anticipates that the country’s relatively immature pension fund market (OFE) will explode between 2003 and 2010 to around ZL37-66bn.
It goes on to say that pension funds will have problems investing their funds in Poland due to a lack of investment instruments, especially on the stock market, where there is a real risk of a speculative bubble.
The problem of illiquidity is a pressing one for Poland. Last year, Marek Mazur, who has chaired the Foundation for the Development of Pension Funds, told IPN: “In the long run if we don't introduce new instruments we will definitely face a liquidity problem, because there will be more funds and the number of listed companies and capitalisation will remain the same.”
Polish companies, except for the largest players, are also still reluctant to issue bonds, perceiving issuances as ineffectual or too risky, said a spokeswoman at the KNUiFE.
But the new report goes on to forecast continued demand for debt instruments, which could lead to dwindling supply, and so ultimately yields.
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