BlackRock, the world’s largest asset manager, announced plans to close its $400 million iShares Frontier ETF, which invests in equities from frontier and select emerging markets, including Nigeria and Kenya.
This decision underscores the ongoing withdrawal of foreign investors from local stock exchanges, driven by a challenging macroeconomic environment that has led firms to downsize and local currencies like the naira to weaken.
“The Board of Directors of the Company approved a proposal to liquidate the fund. In light of persistent liquidity challenges in certain frontier markets, including delays or limits on repatriation of local currency, the board determined that it is in the best interest of the fund and its shareholders to liquidate,” iShares stated.
The fund will enter an extended liquidation period, with the last trading day expected on March 31, 2025. During this period, iShares will liquidate its assets in all markets and hold the proceeds in cash and cash equivalents.
“Currency conversions, including the conversion of Nigeria’s naira, will affect the timing of the fund’s liquidation. Therefore, the fund will enter an extended liquidation period,” iShares added.
“After market close no earlier than August 12, 2024, but on a date as soon as practicable, the fund will cease trading and the creation and redemption of creation units.”
African equities have lost their appeal to foreign investors due to low returns compared to other asset classes and currency shortages in key markets like Egypt, Nigeria, and Kenya.
BlackRock’s iShares has already liquidated its holdings in companies listed on the Nairobi Securities Exchange (NSE). The fund previously held a $5.2 million investment in Kenya, including Safaricom ($2.8 million), Equity Group ($1.5 million), and KCB Group ($885,000).
The fund provided exposure to equities in various African bourses, including Egypt, Kenya, Morocco, and Nigeria, as well as other markets such as Bahrain, Bangladesh, Colombia, Estonia, Jordan, Kazakhstan, Pakistan, Philippines, Romania, Sri Lanka, and Vietnam.
