*Rating triggers selloff
The Financial Times Stock Exchange (FTSE), also known as FTSE Russell Group, has announced the downgrading and reclassification of Nigeria’s Exchange from Frontline to Unclassified Market with effect from Monday September 18, 2023.
In an announcement Monday, September 11, FTSE Russell said Nigeria’s lingering forex challenges have impeded the efforts of institutional investors to repatriate their backlog of trapped capital.
The British financial organisation that specialises in providing index offerings for the global financial markets noted with concern that Nigeria’s recent forex reforms which adopted the “willing seller, willing buyer” policy at the I&E Window in place of the abolished multiple exchange rates windows, has yielded little results.
It noted that despite the temporary index changes adopted for Nigeria within the FTSE Russell since September 30, 2022, there has been little or no improvement in the forex supply trend, thus frustrating the efforts of institutional investors to repatriate capital at the I&E window.
Consequently, the FTSE authorities have announced the downgrading and reclassification of Nigeria from Frontline to Unclassified Market status, with Nigerian index status deleted at zero value (0.0001 NGN) from the five FTSE Russell equity indices.
“Nigeria will be retained in the FTSE ASEA Pan Africa Index Series, with the implementation of certain corporate events suspended until further notice,” the announcement said.
Reacting to the development, Uche Uwaleke, Professor of Capital Market at the Nasarawa State University, Keffi, said the FTSE action portends serious challenge for Nigeria’s equity market.
He wondered why those who pushed Nigeria into floating the Naira when she was not ready for it, would turn round to blame the country.
“They pushed us to float the naira when we were not ready, only to turn around and slam us when the promise of increased forex inflows has yet to materialize. Now we have been left in the lurch,” Uwaleke said.
