•Much like the Nairobi Securities Exchange (NSE) picks the best-performing listed companies to constitute the (NSE) 20-Share Index, the MSCI Index picks the listed companies that are deemed more investible especially by global institutional investors
•Other listed Kenyan companies on one of the world’s biggest index compilers, MSCI (Morgan Stanley Capital International) include Safaricom, KCB Group, Equity Group and EABL
Co-op Bank and British American Tobacco have made it to the MSCI Frontier Markets Small Cap Index, increasing the firms’ visibility to global institutional investors.
MSCI, a leading provider of critical decision support tools and services for the global investment community last week announced the two new additions in Kenya, alongside seven other additional securities in nine frontier markets.
“The changes in constituents for the MSCI Frontier Markets Small Cap Indexes, which will take place as of the close of May 29, 2020,” the firm said.
Much like the Nairobi Securities Exchange (NSE) picks the best-performing listed companies to constitute the (NSE) 20-Share Index, the MSCI Index picks the listed companies that are deemed more investible, especially by global institutional investors.
Other listed Kenyan companies on one of the world’s biggest index compilers, MSCI (Morgan Stanley Capital International) include Safaricom, KCB Group, Equity Group and EABL.
MSCI classifies 32 countries as Frontier Markets, 23 of which are included in the MSCI Frontier Markets Index.
Kenya was the only African country with companies on the index after firms in Morocco, Burkina Faso and Mauritius were “deleted”, according to a notice from MSCI.
The MSCI Frontier Markets Indexes include large, mid-sized, capitalisation companies and provide a broad representation of the equity opportunity set while taking investment requirements into consideration within each market.
According to the Capital Markets Authority, amidst the global risks that are expected to impact many countries, Kenya included; there are a number of investment opportunities at the Nairobi Bourse.
“While many stock markets have declined substantially, it has been argued that in some instances the extent of decline may not be commensurate with the fundamentals of the affected companies and may have been driven by panic,” CMA said in its Quarterly Soundness report.
The capital markets regulator said some listed companies are likely to expand and increase in value due to growing demand in response to Covid-19.
“While initially most sectors are expected to take a hit, the sectors that are likely to benefit the most from the scourge include ICT and e-commerce, pharmaceutical, logistics and delivery, research and data analytics, videoconferencing, entertainment streaming and gaming sector,” the report stated.
The level of volatility of the market as evidenced by the NSE 20 Share and NASI index, was relatively high compared to preceding quarters on the background of the first case of the global pandemic, Covid-19 being registered in Kenya on March 13.
Following the announcement of Kenya’s first case, the markets witnessed panic sales leading to the high volatility levels.
The Kenyan market continues to be highly driven by foreign participation as they seek higher yields in alternative assets within emerging markets.
While the Covid-19 is a global pandemic that started in the European economies, foreign investors were still active in the market with majority of activity being recorded on the sale side.
“While this was expected with the pandemic spreading into Kenya and other sub-Saharan African countries, the Authority in conjunction with NSE and industry players continue to market the Kenyan market as a safe haven for investments for foreigners in the long term,” CMA said.