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MSCI says no plan to exclude Nigerian equities

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Nigeria’s revenue not looking up yet -Adeosun

MSCI, the global provider of research-based indexes and analytics, is consulting global institutional investors on the ease of capital flows in Nigeria and is not proposing exclusion of Nigeria from its composite indexes.

Contrary to insinuations in some quarters that MSCI plans to exclude Nigeria from its indexes later this month, MSCI in a statement stated that it is monitoring the market accessibility due to the foreign exchange constraints in Nigeria and would take into consideration opinions of Nigerian market participants and any potential mitigation plan before deciding on the treatment of MSCI Nigerian indexes.

While ease of capital inflows and outflows is one of the key criteria in the MSCI Market Classification Framework, only a 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.

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MSCI said after the introduction of restrictions on foreign currency trading and the resulting continuous deterioration of foreign exchange market liquidity, it is closely monitoring the situation in Nigeria with regards to market accessibility.

In relation to the foreign exchange situation, MSCI stated that it is proposing to not implement changes resulting from the upcoming May 2016 semi-annual index review and from selective corporate events for the MSCI Nigeria Indexes, as well as selected composite indexes of which Nigeria is a component.

Thus, the expected announcement on April 29, 2016 would not be to exclude Nigeria from MSCI Frontier Markets Index but to decide if Nigerian constituents in the index will be part of the semi-annual index reviews or rebalancing due by May, 2016.

Besides, the feedback from the consultations with market participants and its institutional clients will form part of the
basis for MSCI’s next country reclassification due by June, 2016. Usually, MSCI will give considerable time in the event of any decision on any country.

“MSCI welcomes feedback from market participants on the current level of accessibility of the Nigerian equity market as well as any potential mitigation plan,” MSCI stated.

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