Investors in Nigeria’s equities market on Monday lost about N464.3 billion as the market reacted to the downgrade of the Nigerian Exchange Limited (NGX) by FTSE Russell, a global index issuer.
FTSE Russell, UK-based firm, had downgraded the Exchange from “Frontline” to “Unclassified Market” and hinted that the NGX would be reclassified by September 18, 2023.
The downgrade triggered immediate sell-offs that dragged market capitalization to N36.83 trillion, reversing its gains last week when the market closed on Friday with N37.26 trillion capitalization.
Also, the All-Share Index, which measures the general market trend of all listed equities, fell by 1.2% to 67,296.18 points as against the 0.91% gains last week resulting to the ASI to closing 68,143.34 on Friday.
FTSE Russell indicated that Nigeria’s foreign exchange (FX) shortages in recent months had made it difficult for investors to repatriate funds and proceeds of investment in the capital market.
It stated: “As index changes for Nigeria within FTSE Russell equity indices have been suspended since September 2022 and with no improvement in the ability of international investors to repatriate capital at a foreign exchange rate that would be used in FTSE Russell equity indices, following the reclassification of FTSE Russell equity indices Governance Board, FTSE Russell announces that the FTSE Equity Country Classification status of Nigeria will be downgraded from frontier to unclassified market statues, with Nigerian index constituents deleted at zero value (0.0001 NGN) from the following FTSE Rusell equity indices.”
The delisted indices are FTSE Frontier Index Series, including FTSE Frontier 50 Index; FTSE IdesRatings Islamic Index Series; FTSE/JSE All Africa Index Series; FTSE Middle East& Africa Extended Index Series and FTSE/MV Exchange Index.
Analysts believe that the announced downgrade of the NGX is partly responsible for the selloff pressures in Guaranty Trust Bank Plc (GTCO), which share price fell 8.6% from N38.85 per share to N35.5; Dangote Sugar Plc, which share price also dropped by 10% from N64.15 last Friday to N57.75 per share on Monday while Zenith Bank Plc shares also fell 5.8% from N 36.95 to N34.8.
Also, Access Holdings Plc share price fell 8.57% from N17.5 per share that it closed at on Friday to N16 per share on Monday while Nigerian Aviation Handling Company Plc (NAHCO) share price also dropped fell from N25.45 per share to N23.
