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By Chijioke Ohuocha
LAGOS, June 2 Nigerian stocks
surged to a 4-month high on Monday after equity index provider
MSCI increased the weight of Africa's biggest economy in its
frontier market index.
MSCI increased the weight in the index to
19 percent, from 12 percent, making it the second biggest after
It added oil firm Forte Oil and pan-African lender
Ecobank. Forte surged the maximum allowed 10 percent.
Ecobank added 6.85 percent
Listing in such indexes brings in investors who track them.
Nigeria is struggling with a weak currency and
beset by political risk over upcoming elections and the
abduction of over 200 schoolgirls by Islamist group Boko Haram.
Its stock market is flat on the year to date in dollar terms.
"We are seeing increased buying activities from foreign
investors. The market reacted positively on the back of the
index news," said Akinbamidele Akintola, vice president, Africa
equity sales at Renaissance Capital.
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.
A youthful population, high economic growth rate and an
expanding middle class have drawn investors to frontier markets
in recent years, leading them to significantly outperform
emerging and developed markets in terms of returns.
Foreign portfolio inflows into Nigeria's equity market rose
65.1 percent to 356.50 billion naira ($2.20 billion) in the
first quarter as domestic investors reduced their
(Additional reporting by Oludare Mayowa Editing by Jeremy