In more bad news for Nigerian investors, the Imdex provider,MSCI is considering yanking Nigeria off its MSCI’s Frontier Markets index. The index includes stocks from other African countries such as Kenya, Mauritius and Morocco.
According to Reuters MSCI is consulting with investors to ascertain whether there is ease if capital inflow and outflow in Nigeria.
MSCI said that ease of capital inflows and outflows was one of the key criteria in its market classification framework.
“Introduction of restrictive measures, such as capital or foreign exchange controls, which can lead to material deterioration of equity market accessibility, may result in the exclusion of such market from the MSCI Frontier Markets Indexes and a reclassification to Standalone Market status,” it warned.
Charles Robertson, global chief economist at Renaissance Capital, said the possibility that Nigeria might lose its place in the index had been a risk since it was excluded from key bond indices by JPMorgan and Barclays last year. “Now the risk has become acute,” he said.
Being excluded would create a higher hurdle to attracting future investments, as there would be no need for passive frontier market funds, which track the MSCI index, to hold Nigerian stocks. “With this news, Nigeria’s hopes of attracting private sector investors have been dealt another blow,” Robertson added.
MSCI is likely to take a decision on or before April 29.