Fears for Nigerian stocks, as FTSE Russell downgrades NGX to ‘unclassified market’
Global provider of benchmarks, analytics, and data solutions with multi-asset capabilities, FTSE Russell has downgraded the Nigerian Exchange (NGX) from ‘Frontline’ to ‘Unclassified Market,’ in a space of one week.
In a statement released on Monday, FTSE Russell cited Nigeria’s ongoing foreign exchange problems as a key motivator behind the downgrade.
The downgrade means Nigeria’s index status will be removed entirely from all five FTSE stock indices, effectively given a value of zero. This significant move is likely to have repercussions for Nigeria’s visibility on the international investment landscape, making it more challenging for the country to attract foreign capital.
The reclassification, set to take effect on September 18, 2023, prompted immediate selloffs that drove the All-Share Index down by 1.24% to close at 67,296.18 points.
The downdraft was felt acutely in Nigeria’s Tier-1 banking sector, with Zenith Bank plunging by 5.82%, Guaranty Trust Holding Co. (GTCO) dropping by 8.62%, and Access Bank falling by 8.57%.
This resulted in the market’s year-to-date (YTD) returns tumbling to 31.11% and wiping out N463.66 billion ($1.14 billion USD) in market capitalisation, which closed at N36.83 trillion ($90.81 billion USD).
How foreign exchange woes prompt downgrade
