Nigerian stocks down after MSCI says could remove Nigeria from frontier index

Nigerian stocks fell on Monday after index provider MSCI said it could remove Nigeria from its frontier markets index following the central bank's introduction of currency controls last year. MSCI said late on Thursday that it was seeking feedback from investors on the ease of access to the Nigerian stock market and would announce its decision on or before April 29.
Nigeria's stock market, which has the second-biggest weighting behind Kuwait on the MSCI frontier market index, fell for a second day, shedding 2.68 percent. The index is down 14 percent so far this year in dollar terms, largely because of low oil prices and weakness in the naira currency.
"The MSCI news has just complicated the already low confidence in the market," said Pabina Yinkere, head of research at Vetiva Capital. Foreign investors have been fleeing Nigerian assets, unnerved by the plunge in the price of oil and its impact on the naira and government revenue, forcing the central bank to introduce currency controls to protect its reserves.
In a similar move last year, bond index providers J.P. Morgan and Barclays both removed Nigeria from their emerging market local currency bond index, citing a lack of liquidity and currency restrictions. MSCI increased the weight of Nigeria in its frontier market index to 19 percent two years ago from 12 percent, before the plunge in oil prices battered the economy. Akinbamidele Akintola, equity sales analyst at Renaissance Capital, said funds that track the MSCI frontier index would have to exit Nigeria, causing the stock market to falter.