Lagos: Mr. David Adonri, Vice President of Highcap Securities Ltd., has affirmed that Nigeria’s reclassification to the FTSE Russell Frontier Market status is set to enhance foreign investors’ confidence, market liquidity, and profitability. Adonri shared his insights during an interview with the News Agency of Nigeria (NAN) in Lagos.
According to News Agency of Nigeria, FTSE Russell, a subsidiary of the London Stock Exchange Group, manages stock market indices and has confirmed Nigeria’s return to Frontier Market status as of September 21. This reclassification follows a three-year hiatus from the global index provider’s classification, during which Nigeria was unclassified. Along with this repositioning, FTSE Russell has included 10 Nigerian companies with a combined market capitalization of N67.14 trillion in its FTSE Frontier Index Series.
Adonri congratulated Nigerians on this noteworthy development, highlighting it as a pivotal milestone that will contribute to the deepening of the Nigerian capital ma
rket. The restoration to Frontier Market status serves as an endorsement of the Nigerian capital market’s safety, profitability, and liquidity. He emphasized that such classification by a globally esteemed index provider like FTSE Russell would significantly enhance the international visibility of the Nigerian capital market.
He further explained that various institutional investors, both foreign and domestic, depend on global index classifications to guide their investment decisions in capital markets. Adonri noted, “The kind of confidence this classification elicits can drive liquidity and profitability in the market.” He also observed a noticeable increase in demand for stocks on the Nigerian Exchange (NGX) following the announcement, indicating a direct correlation between this classification and the recent market rally.
Adonri shed light on the circumstances that led to Nigeria’s previous suspension from the FTSE Russell Frontier Market status in September 2023. He attributed it to capital controls tha
t caused foreign investors’ funds to be trapped in the country and the Federal Government’s failure to settle matured currency forward contracts with foreign counterparts. These issues considerably eroded foreign investors’ confidence in Nigeria’s stock market, rendering it incompatible with the standards of a Frontier Market classification.
He concluded by stating that Nigeria has successfully overcome these financial challenges, and the restoration of investors’ confidence warranted a reassessment by FTSE Russell.