By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-Nigeria’s equity index provider MSCI Monday said the weight in index has been increased 19 percent according to Reuters.
With this development, the Nigerian stock market has now hit a four (4) month high. The news agency reported that index climbed up from 12 percent to 19 percent in the review period; making it the biggest after Kuwait.
Reuters said the MSCI index added oil marketing firm Forte Oil Plc and pan-African bank Ecobank Transnational Incorporated (ETI). ‘’Forte surged the maximum allowed 10 percent. Ecobank added 6.85 percent,’’ Reuters said.
The report quoted Akinbamidele Akintola, vice president, Africa equity sales at Renaissance Capital as saying that we are seeing increased buying activities from foreign investors. ‘’The market reacted positively on the back of the index news,” Akintola said.
Reuters said Nigerian stocks rallied 3 percent on Friday ahead of the rejig and rose again on Monday to hit four-month highs. The index of Nigeria’s top five oil and gas firms climbed 7.15 percent, helping the index rise above 40,000 points, a level last seen in January.
‘’Average traded volumes hit $72 million on Friday, compared with an overall average of between $20 million to $30 million this year, Renaissance Capital’s Akintola said.
According to the report, a youthful population, high economic growth rate and an expanding middle class have drawn investors to frontier market in recent years, leading them to significantly outperform emerging and developed markets in terms of returns.
As earlier reported, foreign portfolio inflows into the Nigerian capital market rose 65.1 percent to 356.50 billion naira in the first quarter (Q1) 2014 as domestic investors reduced their exposure.
Cordros Capital analysts say the continuous inflows from foreign investors, the anticipation of the new central bank of Nigeria (CBN) governor and the increase in the number of local investors should continue to bode well for the equity market.
