LAGOS, May 3 (Reuters) – 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 last month said it would consult investors on the ease
of access to the Nigerian stock market in the wake of currency
controls introduced last year which could have led to it
removing Nigeria from its frontier index.
Nigeria’s stock market, which has the
second-biggest weighting behind Kuwait on the MSCI frontier
index, 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.
In a statement released late on Friday, the index provider
said Nigeria will receive “special treatment” in its upcoming
semi-annual index review in May given the deteriorating
liquidity in its foreign currency market.
It said Nigerian securities listed in its country or
composite indexes would not be subject to changes, such as
migration between size segments or the additions of new eligible
“MSCI will, however, implement deletions from the relevant
indexes or reductions in the Foreign Inclusion Factor (FIF)
caused by low foreign room, low liquidity or prolonged
suspension,” it said in a statement.
However, share dealing by foreign investors in Nigeria has
been declinning. 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.
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
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