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FTSE Russell has announced that the FTSE Equity Country Classification status of Nigeria will be downgraded from Frontier to Unclassified market status.
FTSE said it received feedback from market participants that although Nigeria has adopted a floating foreign exchange (FX) rate for the Nigerian Naira in the Investors’ & Exporters’ (I&E) FX Window, which is now operating on a “Willing Buyer, Willing Seller” basis, the lack of liquidity in the I&E FX Window continues to adversely impact the ability of international institutional to replicate benchmark changes.
Consequently, Nigerian index constituents are deleted at zero value (0.0001 NGN) from the following FTSE Russell equity indices, effective from the open on Monday 18 September 2023: · FTSE Frontier Index Series, including the FTSE Frontier 50 Index · FTSE IdealRatings Islamic Index Series · FTSE/JSE All Africa Index Series · FTSE Middle East & Africa Extended Index Series.
FTSE/MV Exchange Index Nigeria will be retained in the FTSE ASEA Pan Africa Index Series, with the implementation of certain corporate events suspended until further notice.
Foreign investors are not buying a massive stock rally, since President Bola Tinubu was sworn-in on May 29, MoneyCentral reported today. FTSE Russell’s downgrade of the Nigerian market will make it even more difficult for foreign funds to gain exposure to Nigerian equities.
Nigerian stocks have gained N6.94 trillion in market capitalization in the 3-months period since Tinubu’s ascension to the presidency, largely led by domestic institutional and retail buying.
In that time period, foreign investors sold N21.94 billion worth of Nigerian stocks on a net basis, according to data from the NGX.
FTSE Russell will continue monitoring Nigeria and once the foreign currency delays are cleared for a period of time, Nigeria will be assessed as a new market in accordance with the FTSE Equity Country Classification Process.
This process will follow the standard FTSE Equity Country Classification procedure and timetable for a new market, with Nigeria required to spend a period of time on the Watch List before it is readmitted as an eligible market for the FTSE Russell equity indices.