Industry Updates

DWS to remove Nigeria from frontier ETF following SPDJI exclusion

Africa’s largest economy is facing a chronic dollar shortage

Theo Andrew

Nigeria frontier markets

DWS will remove Nigeria from its frontier market ETF after S&P Dow Jones Indices (SPDJI) made the decision to exclude Africa’s largest economy.

The £68m Xtrackers S&P Select Frontier Swap UCITS ETF (XSFR) will see Nigerian stocks – which account for 4.8% of the index – written down to zero.

It comes after SPDJI said it would exclude the country at its semi-annual rebalance on 1 November following liquidity issues in its foreign exchange markets.

In a market announcement, SPDJI said: “As a result of market liquidity issues in the foreign exchange market and significant delays in capital repatriation for stocks listed in Nigeria, SPDJI has decided to remove Nigeria-domiciled constituents from the S&P Select Frontier and S&P Extended Frontier 150 indices.

“The constituents will be removed at a zero-price, given the distortion between the parallel and official exchange rates for the Naira and to facilitate index replicability.”

DWS told shareholders the removal would impact the net asset value and secondary market trading prices.

Nigeria has faced US dollar shortages in recent weeks after foreign investors exited the market during a period of low oil prices.

Despite oil rising in recent weeks, investors have not returned and the central bank is struggling to meet the demand for dollars from foreign investors.

Nigeria is expected to see $10bn in foreign currency inflows over the next month in an attempt to ease pressures, Reuters reported.

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