Capital market experts on Sunday said the restoration of Nigeria’s Frontier Market status by FTSE Russell would boost growth prospects for the country.
The experts told the News Agency of Nigeria in separate interviews in Lagos that the development was expected to strengthen investor confidence, enhance liquidity, and attract increased foreign capital inflows into the capital market.
They said the status would reposition the market for greater participation by both foreign and domestic investors.
NAN reports that Nigeria will in Sept. 21 be restored to Frontier Market status from an unclassified category by FTSE Russell, a subsidiary of the London Stock Exchange Group, which produces, maintains, licenses, and markets global stock market indices.
Mr David Adonri, Vice President of Highcap Securities, said the restoration could increase foreign investors’ confidence in the Nigerian capital market.
According to him, the classification is a key parameter used by international investors in assessing markets for investment.
“This is a positive development for the country, and I congratulate all stakeholders involved.
“This development can facilitate higher volumes and value of transactions in the capital market,” he said.
Also speaking, Mr Tajudeen Olayinka, an investment banker and stockbroker, said the development was similar to ratings assigned to economies by global rating agencies, which influence investment decisions.
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He explained that global investors pay attention to securities exchanges classified as frontier or emerging markets when making investment decisions outside developed markets.
Olayinka said the new status would trigger increased inflows of foreign portfolio investment and boost participation by local institutional investors due to improved liquidity.
He noted that it would encourage more companies to list on the exchange and raise capital at lower costs, thereby strengthening the supply side of the economy.
According to him, increased access to funding would enable businesses to expand operations while also attracting foreign direct investment into the economy.
“The development could contribute to moderating inflation and interest rates, enhance wealth-creation opportunities for investors, and position the country for a possible upgrade to emerging market status in the future,” he said.
Olayinka said the restoration would also support the government’s economic growth agenda, including the target of achieving a one-trillion-dollar economy by 2030.
He said the benefits of the development were enormous for both the capital market and the broader economy.
NAN
