The Nairobi Securities Exchange (NSE) has introduced two new market indices to track performance of the top ten listed firms and monitor the bond market.
The NSE 10 Index, which comes into effect immediately, will monitor the performance of the equities of Safaricom Plc, Co-op Bank Group, Equity Group Holdings Plc and KCB Group Plc.
Others are KenGen, EABL, Kenya Re, Absa, Centum and NCBA Group.
"The NSE 10 Index shall be based on a set of 10 companies, whose list will be reviewed semi-annually. One of the key elements of this index is that it will be based on market capitalisation float-adjusted methodology and will be distributed on a daily basis," the NSE said.
NSE boss Geoffrey Odundo said the new indices will enable investors to track market activities better.
The bourse has also unveiled the NSE-BI which is set to launch on October 1.
The new index will focus on the bonds market.
Over the years, the NSE has had three main indices, namely the NSE 20 Share Index, NSE 25 Share Index, and NSE All Share Index.
The Nairobi bourse has posted poor performance since 2020, with few counters in the rich NSE 20 controlling over 70 per cent of the total market capitalisation.
Latest report by the Capital Market Authority (CMA) shows five top companies at NSE increased market dominance to a year high of 75.4 per cent, further worsening exposure risk for the Nairobi bourse.
The quarterly market soundness report shows Safaricom, East Africa Breweries Limited (EABL), KCB Group, Equity Bank and Co-op Bank now control Sh1.2 trillion of investors wealth out of Sh1.5trillion.
NSE says this gives falls impression of the bourse, considering that some firms like Safaricom hold up to half of the market capitalisation.
In a bid to align with best practices in index management, NSE has also made alterations to the NSE 20 Share Index.
WPP Scan Group Plc, Nairobi Securities Exchange Plc, and Diamond Trust Bank Kenya have been replaced by CIC Insurance Group Plc, Bank of Kigali Group Plc, and I&M Holdings Plc as constituent companies, effective immediately.
