By Taiye Olayemi
Mr David Adonri, Vice President of Highcap Securities Ltd., says the reclassification of Nigeria to the FTSE Russell Frontier Market status will boost foreign investors’ confidence, market liquidity and profitability.
Adonri said this during an interview with the News Agency of Nigeria (NAN) in Lagos.
NAN reports that FTSE Russell, a subsidiary of the London Stock Exchange Group, creates, maintains, licenses, and markets stock market indices.
The platform confirmed Nigeria’s return to Frontier Market status from its Unclassified status, effective Sept. 21, following a three-year absence from the global index provider’s classification.
FTSE Russell also admitted 10 Nigerian companies worth N67.14 trillion by market capitalisation in its FTSE Frontier Index Series.
The stockbroker congratulated Nigerians on the remarkable development, describing it as a significant milestone that would help deepen the Nigerian capital market.
Adonri said the country’s restoration to the Frontier Market status was a testament to the safety, profitability and liquidity of the Nigerian capital market.
He described the development as an important global attestation that foreign and domestic institutional investors could rely on when making investment decisions.
The analyst said classification by a reputable global index provider such as FTSE Russell would also enhance the international visibility of the Nigerian capital market.
He explained that several foreign and domestic institutional investors relied on global index classifications in positioning their investments in capital markets.
“The kind of confidence this classification elicits can drive liquidity and profitability in the market.
“Following the recent announcement of Nigeria’s restoration, demand for stocks on the Nigerian Exchange (NGX) has risen tremendously.
“There is no doubt that there is a causal relationship between the announcement and the recent rally,” he said.
Explaining what led to Nigeria’s suspension from FTSE Russell’s Frontier Market status in September 2023, Adonri said it was due to capital controls that resulted in foreign investors’ funds being trapped in the country.
According to him, the Federal Government’s failure at the time to settle matured currency forward contracts with foreign counterparties further weakened foreign investors’ confidence in the Nigerian capital market.
“These failures severely damaged foreign investors’ confidence in Nigeria’s stock market and were inimical to the standards expected of any market classified as a Frontier Market.
“Subsequently, Nigeria surmounted those financial challenges and investors’ confidence has since been restored, warranting a reconsideration by FTSE Russell,” he said.(NAN)(www.nannews.ng)
Edited Folasade Adediran