Last week, FTSE Russell made it official that Nigeria will be added to its Frontier Market Index on 21 September. This index is simply a global list of markets that large investment funds have to put money into.
Once Nigeria is on the list, those funds must buy Nigerian stocks automatically. Around $1 billion is expected to flow in, which is less than 1% of the Nigerian stock market’s total value. What matters more than the money is the message: major global investors trust Nigeria’s market enough to put it back on their list.
Now that the upgrade is confirmed, the question is what investors do next. Many people have been buying Nigerian stocks all year expecting this upgrade to happen. Some of them may now sell once it actually lands on 21 September to take their profits off the table. Watch whether the upgrade brings fresh buyers in or triggers a wave of selling.
After a tough August, the Nigerian market bounced back last week. The All-Share Index, which tracks how all stocks on the exchange are doing overall, rose 0.81% to close at 241,298 points. The market is still up 55.06% since January, making it one of the best performing markets in the world this year.
Seplat Energy (SEPLAT) was the biggest mover, jumping 10% in a single day to close at ₦12,320.60 as oil prices held near $98.16 a barrel. Zenith Bank (ZENITHBANK) was the most actively traded stock, with 69.95 million shares worth ₦8.20 billion changing hands. First HoldCo (FIRSTHOLDCO) rose 4.65% to ₦135.00.
Some money is still moving out of stocks into government bills paying around 20%, but this is not because Nigerian companies are doing badly. It is simply because a guaranteed 20% return with no risk is very hard to say no to. Company results are still improving, which means lower stock prices right now could be a good opportunity for patient investors.