New York-based Morgan Stanley Capital International (MSCI) Inc has added two more Kenyan listed firms to its frontier markets indices, offering a big boost to the Nairobi Securities Exchange (NSE), which is looking for ways to maintain a growth momentum launched in 2024 after five consecutive years of decline.
The global, finance, research and investment advisory firm has, in its latest index review for global markets, added Standard Chartered Bank Kenya to its frontier markets index, joining Cooperative Bank, Safaricom, Equity Group, East African Breweries Ltd (EABL) and KCB Group.
It has also added housing financier HF Group to its frontier markets small cap index, joining BAT Kenya, KenGen, Kenya Re and DTB Group.
The latest changes will take effect after the close of business on February 28, 2025, MSCI said in a statement on February 11.
The inclusion of the additional stocks widens the pool of stocks that are visible to foreign investors on the NSE, potentially boosting foreign inflows at a time when the market has generally seen net outflows from offshore investors.
The MSCI carries out quarterly reviews on its indices every February, May, August and November, allowing it to introduce or remove constituent companies and adjust their weighting within an index.
The reviews are meant to investors an up-to-date picture of the state of an exchange, allowing them to make informed decisions.
The MSCI index tracks the performance of global equities, bonds and real estate markets and advises foreign institutional investors including pension funds which markets to invest in.
It also classifies markets into developing, emerging, frontier and standalone.
Trading activities on the NSE rebounded in 2024 after five consecutive years of decline, buoyed by increased investor appetite for banking stocks, relative stability of the shilling exchange rate and the government’s repayment of a $2 billion Eurobond, warding off a potential default tag and rekindling foreign investor confidence in the economy.
“In 2024, the Kenyan economy experienced a significant development that contributed to a macroeconomic rebalancing, gradually positioning the nation on a stable and sustainable growth trajectory,” said NSE chief executive Frank Mwiti.
“A key milestone was the timely repayment of the $2 billion Eurobond, which played a pivotal role in boosting investor confidence and alleviating concerns about potential default risks. This positive shift spurred heightened economic activity throughout the year.”
Official data from the NSE shows market turnover grew by 20 percent to Sh105.23 billion from Sh88.23 billion in 2023, marking the first annual growth in equity trading activities since 2018.
The last time NSE posted a positive annual equity market turnover was in 2018, when it grew to Sh175.65 billion, from Sh171.61 billion in 2017.
Market turnover indicates how much trading activity took place on a given business day in the market as a whole or individual stock.
The share turnover is a measure of liquidity, which signifies the relative ease with which an investor can easily convert a share into cash.
