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Chinwendu Obienyi
MSCI Inc, a leading provider of research-based indexes and analytics, has included Nigeria, Lebanon, Bangladesh in the list of Frontier Markets that have accessibility issues.
In a report entitled “MSCI 2020 Market Classification Review”, the MSCI highlighted challenges in the Nigerian equity market having been impacted by the significant deterioration of liquidity in the Nigerian FX market.
The research-based index also disclosed that it will not implement selected changes for any securities classified in frontier markets that include Nigeria, Lebanon or Bangladesh in the relevant MSCI Country Indexes or in any derived indexes that contain these markets.
‘Some market accessibility issues have been recently observed in select Frontier Markets. The Nigerian equity market has been impacted by the significant deterioration of liquidity in the NigerianFX market. While such accessibility issues may be viewed by market participants as part of the inherent characteristics of Frontier Markets, these developments have a negative impact on the replicability of the indexes.
‘Therefore, MSCI will continue classifying these markets as Frontier Markets until further notice, while applying a special treatment to potentially reduce the number of changes in the related indexes and mitigate the index replication concerns.’
According to MSCI, it will not implement selected changes for any securities classified in Nigeria, Lebanon or Bangladesh in the relevant MSCI Country Indexes or in any derived indexes that contain these markets.
‘This special treatment will apply to any potential changes that would be part of upcoming index reviews, as well as certain corporate event implementations. This treatment has been in effect for the MSCI Nigeria Indexes since May 13, 2020, and will be applicable to the MSCI Lebanon Indexes and the MSCI Bangladesh Indexes effective immediately,’ it said.
