MSCI Deletes Nigerian Indexes from Frontier Markets
MSCI Inc. has finally removed Nigerian securities from its frontier markets indexes category, MarketForces Africa confirmed by the global investment service firm.
Nigeria was not found among 28 countries listed on the index frontier markets, which harbours other smaller African countries’ securities.
It had opened a consultation proposal to downgrade Nigeria Indexes to standalone status after previous warnings to investors about foreign currency scarcity in Africa’s largest economy.
A check on its website confirmed that Nigerian securities have been removed. MarketForces Africa reported that MSCI planned to delete Nigerian securities from frontier markets indexes on February 29, 2024, despite ongoing forex market reforms.
The leading provider of critical decision support tools and services for the global investment community, announced the results of the February 2024 Index Review for the MSCI Equity Indexes.
MSCI announced a resolve to reclassify Nigeria from frontier market status to standalone market status in one step, coinciding with this index review. The platform is carrying out its decision to downgrade the Nigerian index after it complained about the inability of foreign investors to get the US dollar out of Nigeria.
“In light of currently observed market accessibility issues, MSCI will not implement changes as part of this Index Review for any securities classified in Bangladesh, Egypt, or Kenya for the MSCI Bangladesh, MSCI Egypt, and MSCI Kenya Indexes or impacted composite indexes”.
MSCI said that since March 2020, accessibility issues have persisted in the Nigerian equity market. The repatriation of funds from investments in the market remains extremely difficult for foreign investors due to low liquidity in the Nigerian foreign exchange market.
As a result, market participants have continuously expressed concerns related to the investability and replicability of the MSCI Nigeria Indexes, according to the statement.
It said there will be nine additions to and eleven deletions from the MSCI Frontier Markets Index.
The three largest additions to the MSCI Frontier Markets Index measured by full company market capitalization include Casablanca Travaux Generaux De Construction De SA (Morocco), Telekom Slovenije dd (Slovenia) and FPT Securities JSC (Vietnam).
To facilitate index replicability at the time of the reclassification, the Nigerian securities will be deleted from the MSCI Frontier Markets Indexes at the lowest system prices of 0.00001 as of the close of February 29, 2024.
The investment services provider said twenty-nine securities will be added to and 31 securities will be deleted from the MSCI ACWI Islamic Index.
The three largest additions to the MSCI ACWI Islamic Index measured by full company market capitalization will be Servicenow (USA), Mondelez International A (USA) and Acwa Power Company (Saudi Arabia).
It said there will be two additions to and one deletion from the MSCI Gulf Cooperation Council (GCC) Countries ex Saudi Arabia IMI Islamic Index.
In 2022, MSCI said there has been a continual and severe deterioration in the ability to repatriate funds from Nigeria. Given the prolonged nature of the issues affecting the market’s accessibility, the global service provider said it put forth the consultation to reclassify the MSCI Nigeria Indexes. #MSCI Deletes Nigerian Indexes from Frontier Markets
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