- SEC Director General, Lamidi Yuguda
The Chairman of the Capital Market Committee (CMC) and Director General of the Securities Exchange Commission (SEC), Lamido Yuguda has expressed concerns about the recent reclassifications of Nigerian securities indices by FTSE-Russell and MSCI, attributing these to the present foreign exchange liquidity challenges and its effects on investor confidence.
The Financial Times Stock Exchange (FTSE), now known as FTSE Russell Group, is a British financial organisation that specialises in providing index offerings for the global financial markets while Morgan Stanley Capital International(MSCI) is an organisation which provides investment data and analytics services to investors.
This is just as he assessed the global economy, acknowledging its resilience amid challenges such as the pandemic, ongoing geopolitical tensions, and economic uncertainties around the world.
Yuguda, who expressed concern at the third 2023 CMC meeting with critical stakeholders in Lagos, highlighted the disparity in economic performance across countries and regions, lower global growth projections, and the impact of interest rate hikes on economic activity.
Recall that on October 26, 2023, MSCI, a provider of benchmark indexes and multi-portfolio analysis tools, made known the reclassification of MSCI Nigeria indexes from Frontier Markets to Standalone Market Status.
What this means is that MSCI will delete each Nigerian security from the MSCI Frontier Markets Indexes at a price that is effectively zero.
MSCI reclassification is coming on the heels of FTSE Russell reclassification of Nigeria’s equity country classification to unclassified from frontier markets on September 8, 2023.
The decision of MSCI to reclassify Nigeria’s market is due the incessant Foreign Exchange (FX) liquidity issues, which stood as a stumbling block towards accessing the Nigerian equity market and capital repatriation by foreign investors.
The Chairman highlighted the disparity in economic performance across countries and regions, lower global growth projections, and the impact of interest rate hikes on economic activity.
On the domestic front, he highlighted key economic indicators, including Nigeria’s headline inflation rate, GDP growth rate and market performance.
The Chairman said that in spite of lower foreign portfolio investment inflows, the Nigerian stock market had reached a positive milestone with the All-Share Index reaching an all-time high, crossing the 70,000-point mark, adding that this reflected a more than 30 per cent increase this year.
Addressing the challenges posed by high-interest rates on government treasury securities, Yuguda stressed the need for strategic measures to attract more investments into the capital market.
He also provided updates on new issuances, mergers and acquisitions, and regulatory measures, including directives on Anti- Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance.
The SEC DG also underscored the Commission’s efforts in digitisation, market modernisation, human resources restructuring and collaboration with other stakeholders, domestic and foreign.
He expressed optimism about unlocking the full potential of the capital market, aligning it with the Renewed Hope Agenda of the President, Bola Tinubu’s administration.
About The Author
