Morgan Stanley Capital International (MSCI) recently released its Semi Annual Half year Index review, which will take effect on the 28th of May, 2019.
Changes made: For its Nigerian Index, four stocks where removed, while the weighting of several others was increased.
Access Bank, UBA and Unilever Nigeria were removed from the MSCI Nigeria index.
The weightings for Dangote Cement, Guaranty Trust Bank, Nestle Nigeria, Zenith Bank, Nigerian Breweries, Stanbic IBTC Holdings, Seplat, FBN Holdings and Ecobank Trans International were increased.
Guaranty Trust Bank had the largest share of the Nigerian index at 19.89%. Dangote Cement follows closely at 18.69%. Nestle Nigeria takes the third position at 17.05%.
For the MSCI NIgeria IMI index, Fidelity Bank was removed, while Dangote Cement and Lafarge Africa had their weightings increased.
Why were the four stocks removed?: The stocks may have been removed due to a decline in their market capitalization, for the period under review.
The Nigerian stock market has performed poorly in 2019, and the All Share Index is down by 9.37% year to date.
Implications of the changes: The stocks removed from the indices may witness a sell down as foreign portfolio investors will rebalance their portfolios accordingly.
The rebalancing however in no way implies a change in the fundamentals of the stocks, which remain sound.
The MCSI Frontier Market Index was created in 2007 and tracks the stock markets of countries which are more volatile than emerging markets.
The 21 countries in the Index are Argentina, Bahrain, Bangladesh, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Morocco, Nigeria, Oman, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, and Vietnam.
It also includes the West African Economic and Monetary Union. It consists of the following countries: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
Emerging markets are usually known to be volatile but when you have others than are more volatile than the rest of the lot, that tells you something! 😅