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MSCI Delays Downgrade of Nigeria to Stand-Alone Market

By Modupe Gbadeyanka

Leading global provider of investment decision support tools, MSCI, has disclosed that it would delay its decision on the potential removal of the MSCI Nigeria Index from the MSCI Frontier Markets Index.

In a statement issued on Tuesday, June 20, 2017, the firm said it would now wait till November 2017 before making its decision known.

Explaining the rationale behind this, MSCI said it was “to allow more time for international institutional investors to better assess the effectiveness of the new FX trading window introduced by the Central Bank of Nigeria (CBN).”

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When it finally makes the announced in November this year, MSCI may downgrade the MSCI Nigeria Index to Stand-Alone Market status.

At the moment, Botswana, Ghana and Zimbabwe are the African countries in the category.

In the present category Nigeria is in, the MSCI Frontier Markets Index, Kenya, Mauritius, Morocco and Tunisia are the Africa nations also in the group.

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On April 21, 2017, the CBN introduced a new FX trading window for investors and exporters 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.

As a reminder, the central bank 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.

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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.

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Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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