(Adds more detail on MSCI, background)
May 3 Nigerian stocks climbed to a
five-week high on Tuesday after index provider MSCI said it
would not change the status of Nigerian securities on its
MSCI, which has invited investor feedback on the ease of
access to Nigerian stock markets in the wake of currency
controls imposed last year, put out a statement late on Friday
saying the country would receive “special treatment” in its
upcoming semi-annual index review in May.
Pavlo Taranenko from MSCI Index Management Research said on
Tuesday the firm was not officially “considering” or “consulting
on” a reclassification, but only “monitoring”. Any
reclassification of Nigeria from the MSCI’s Frontier Markets
index would have to be preceded by a consultation, like all
index changes, he added.
Nigeria’s stock market, which has the
second-biggest weighting behind Kuwait on MSCI’s frontier
benchmark , gained 3.2 percent on Tuesday to
levels last seen in March.
The index of Nigeria’s top 10 consumer goods
rose 5 percent, with Nestle leading the charge to
rise 10.25 percent, the maximum allowed.
Other gainers included Nigerian Breweries, United
Bank for Africa and Dangote Cement, which
accounts for third of total capitalisation, each up 5 percent.
However, share dealing by foreign investors in Nigeria has
been declining. Foreign share dealing fell to 34.4 billion naira
($173 million) in March, down 66 percent from a year ago, the
stock exchange said, adding that more than half of transactions
were deals to sell shares.
Nigeria has also seen an exodus of foreign money from other
assets. In September, JP Morgan announced it would eject the
country from its influential emerging markets bond index due to
the currency controls, which were imposed to prevent a collapse
of the naira. Barclays followed suit shortly after.
Africa’s biggest economy is facing its worst crisis in
decades as the fall in the price of oil has slashed government
revenues, prompting the central bank to peg the currency and
introduce curbs to protect foreign exchange reserves, which have
fallen to an 11-year low.
For MSCI the ease of capital inflows and outflows is one of
the key criteria in its market classification framework. Being
excluded from MSCI’s Frontier Market index would create a higher
hurdle for Nigeria to attract investments.
Renaissance Capital estimated in April that about $480
million of MSCI benchmarked money was in Nigeria, in both mutual
funds and exchange traded funds.
($1 = 198.80 naira)
(Reporting by Chijioke Ohuocha; Additional reporting by Oludare
Mayowa and Karin Strohecker in London; Editing by Mark