BlackRock, the world’s biggest asset manager, is closing its $400 million ETF, iShares Frontier. This fund invests in stocks from frontier and emerging markets, including Nigeria and Kenya.
The decision to shut down this fund highlights the ongoing exit of foreign investors from local stock markets. This trend is driven by tough economic conditions, including business downsizing and weakening local currencies like Nigeria’s naira.
iShares explained that its board decided to liquidate the fund due to persistent liquidity problems in some frontier markets. These issues include delays and restrictions on converting local currencies back to dollars, making it difficult for investors to retrieve their money.
The fund will stop trading on March 31, 2025, entering a prolonged liquidation period. During this time, iShares will sell its assets and hold the proceeds in cash. The timing of the liquidation will be affected by the conversion of local currencies, especially Nigeria’s naira.
Trading of the fund will halt after market close on a date between August 12, 2024, and as soon as possible after that. The creation and redemption of fund units will also stop then.
African stocks have become less attractive to foreign investors due to low returns and currency issues in key markets like Egypt, Nigeria, and Kenya.
BlackRock’s iShares has already sold its investments in companies listed on the Nairobi Securities Exchange, which totaled $5.2 million. This included investments in Safaricom ($2.8 million), Equity Group ($1.5 million), and KCB Group ($885,000).
The fund used to offer exposure to stocks in various African markets, including Egypt, Kenya, Morocco, and Nigeria, as well as in other countries like Bahrain, Bangladesh, Colombia, Estonia, Jordan, Kazakhstan, Pakistan, Philippines, Romania, Sri Lanka, and Vietnam.
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