BlackRock's $400m emerging market ETF to exit Nigeria, Kenya
TLDR
- BlackRock closing $400 million iShares ETF due to challenges in frontier and emerging markets like Nigeria and Kenya.
- ETF liquidated because of tough economic conditions and currency issues, with market liquidity problems and currency repatriation restrictions.
- Weakening local currencies, like Nigerian naira, complicate asset management, prompting closure decision by BlackRock.
Global asset manager BlackRock is closing its iShares ETF, valued at $400 million, due to ongoing challenges in frontier and emerging markets.
This ETF included investments in countries like Nigeria and Kenya and is being liquidated because of tough economic conditions and currency issues. The iShares Board of Directors approved the closure as these markets face liquidity problems and restrictions on currency repatriation.
The weakening of local currencies, such as the Nigerian naira, has further complicated asset management for investors, prompting BlackRock to make this decision.
Key Takeaways
African equities have lost their appeal to foreign investors due to low returns and currency scarcity in markets like Egypt, Nigeria, and Kenya. The iShares ETF, which is now being liquidated, had significant investments in Kenyan companies such as Safaricom, Equity Group, and KCB Group, totaling $5.2 million. In Nigeria, the ETF held investments in Dangote Cement and Afriland Properties Plc, valued at approximately $5.3 million and $10.7 million, respectively. Despite efforts to promote fair and transparent investment opportunities in these regions, the challenging economic environment has led many foreign investors to reconsider their positions. The fund also had exposure to other markets including Egypt, Morocco, Bahrain, Bangladesh, Colombia, and Vietnam. The decision to close the ETF reflects the broader difficulties faced by investors in managing assets in these volatile markets.
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