Nigeria no longer under review for demotion – MSCI

MSCI says Nigeria will remain in its frontier indexes

Index provider MSCI says Nigerian stocks will remain part of its frontier indexes and are no longer under review for a possible demotion – a status which the securities had been under since September 2016 after the government introduced capital controls.

“The market will be removed from the review list for potential reclassification to Standalone status,” MSCI said in a statement posted on its website late on Thursday, adding that the central bank’s introduction of a new foreign exchange window in April had improved the situation for foreign investors.

“Market participants have indicated that since the establishment of this Window, funds can be repatriated at close to the official rate.

“Concerns on the spreads and delays which investors have earlier experienced have also eased.”

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“On April 21, 2017, the Central Bank of Nigeria introduced a new FX trading window for investors and exporters that aimed to facilitate the repatriation of capital.

“To date, investors seem to be cautiously optimistic on the effectiveness of this new window but still require more time to test it further,” the statement added.

“As a reminder, the Central Bank of Nigeria pegged the local currency to the US dollar in the first half of 2015, resulting in a sharp decline in liquidity on the foreign exchange market, particularly at the beginning 2016.

“Hence, the ability of international institutional investors to repatriate capital has been significantly impaired to a point where the investability of the Nigerian equity market is being questioned.