Analyst say MSCI overstates the worth of Nigerian stocks using interbank rate

Date:

Investors are now making a case for MSCI to use the price of the naira on the window to value stocks instead of the tightly controlled interbank rate. BlackRock Inc., Allan Gray Ltd. and Frontaura Capital LLC have already started using the new rate.

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“Using the official rate means that MSCI is overstating year-to-date performance of their Frontier Market Index by about 1 percentage point,” said Tom Egbert, an analyst at Frontaura. “MSCI should switch its valuation away from the official rate, which is now unobtainable and irrelevant to investors.”

The stock markets of the world’s developing economies are about to undergo a kind of a revolution.

As index provider MSCI Inc. prepares to carry out its annual review in June, some of the world’s biggest and best-performing equity markets — with assets totaling almost $9 trillion — are poised for reclassification.

Nigeria

PAST
Nigeria IS struggling to restore investor confidence in its currency, has seen its benchmark stock index lose more than 30 percent in dollar terms over the past 12 months. MSCI is considering whether to downgrade Nigeria from a frontier nation to a standalone market.

PRESENT
Investors are giving a thumbs up for a foreign-exchange window that started in April, which allows them to repatriate funds or value their naira holdings at rates more closely aligned to the informal market. A U.S. exchange-traded fund focusing on Nigeria has seen inflows after the start of the new mechanism.

 

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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