The Securities and Exchange Commission (SEC) has attributed the reclassifications of Nigerian securities indices by FTSE-Russell and MSCI to the present foreign exchange liquidity challenges, and its effects on investor confidence.
Lamido Yuguda, Chairman of the CMC, and Director General, Securities and Exchange Commission, Nigeria stated this at the post-Capital Market Committee (CMC) press briefing in Lagos.
FTSE Russell, a subsidiary of London Stock Exchange Group (LSEG) recently downgraded the Nigerian equities market while MSCI Nigeria Indexes had announced plans to reclassify the Nigerian market from frontier markets to standalone markets status in one step coinciding with the February 2024 index review.
- “We noted with concerns around 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,” he said.
Investment inflows
The SEC DG reported that, despite 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.
This, he said, reflected a more than 30% 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 underscored the Commission’s efforts in digitization, market modernization, HR restructuring, and collaboration with other stakeholders, domestic and foreign.
Yuguda expressed optimism about unlocking the full potential of the capital market, aligning it with the Renewed Hope Agenda of the Bola Tinubu administration.
Commodities Trading Ecosystem
Ms. Daisey Ekineh, Chairperson of the Technical Committee on the Commodities Trading Ecosystem, disclosed the ongoing engagement with the Standards Organization of Nigeria (SON) to secure approval of certain standards and the adoption of additional commodity standards sanctioned by the African Organisation for Standardisation (ARSO).
She highlighted other initiatives by the Technical Committee, with a particular focus on introducing commodity derivatives.
Ekineh also noted the committee’s efforts to work with the National Insurance Commission (NAICOM) to further de-risk the ecosystem by introducing insurance products that suit the needs of the commodities producers and traders.
E-Dividend Mandate
The E-Dividend Mandate Technical Committee presented an update on the collaborative project with ICMR and NIBSS to enhance the e-Dividend portal.
The Committee Chair, Mrs. Hafsat Rufai, reaffirmed its commitment to the project’s timely completion, aiming for a launch on or before November 30, 2023.
Rufai noted that 18 out of 19 Registrars had submitted updated data on Un-Mandated Accounts for upload.
Non interest capital
The Non-Interest Technical Committee Chairperson, Mrs. Hajara Adeola, provided an overview of key developments since the previous meeting, which include:
- “The successful issuance of the 6th FGN Sukuk by the Debt Management Office (DMO) with a remarkable subscription level of 435%; floatation of additional Shariah-compliant Fixed-Income Fund; and hosting of a capacity-building workshop for stakeholders in the non-interest segment by SEC.”
The Committee also noted that it has finalized plans to engage with various stakeholders to explore the development of Shariah-compliant liquidity instruments for the commodities market and the creation of short-term Sukuk with the DMO.
Adeola acknowledged the challenges faced in the non-interest market, including; lack of awareness on the existence of the Non-Interest Pension Funds; absence of an established commodities market for non-interest instruments; limited pool of investment-grade potential corporate sukuk issuers within the domestic capital market; and the unavailability of a sukuk issuance calendar and short-term liquidity instruments.
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