Foreign and institutional investors are showing renewed interest in Nigerian equities following the country’s return to FTSE Russell’s Frontier Market indexes.

The reclassification took effect on Monday, triggering increased trading activity, particularly in major banking stocks.

Zenith Bank, GTCO and FirstHoldCo were among the companies that attracted strong initial demand as international investors began adjusting their portfolios.

Nigeria was removed from FTSE Russell’s indexes in 2023 after challenges including foreign exchange shortages and difficulties repatriating investors’ funds.

The country has since introduced reforms aimed at improving foreign exchange liquidity, stabilising the naira and strengthening market infrastructure.

FTSE Russell says Nigeria now meets all five of its quality-of-markets requirements for frontier market status.

Analysts expect the move to attract more foreign capital, improve market liquidity and increase demand for Nigerian bonds and equities, although they warn that greater foreign participation could also make the market more sensitive to global economic and exchange-rate movements.