Major boost for Nairobi bourse as listed firms join key global indices

The Nairobi Securities Exchange (NSE) has received a significant boost with the inclusion of the Co-operative Bank of Kenya in the Morgan Stanley Capital International (MSCI) Frontier Markets Index.

The bourse is also set to benefit from the addition of four other Kenyan companies to the MSCI Frontier Markets Small Cap Index - British American Tobacco Kenya, Diamond Trust Bank Kenya, Kenya Electricity Generating Company, and Kenya Reinsurance Corporation.

MSCI, a leading provider of decision support services for global investors, has announced the addition of Co-op Bank as a constituent in the MSCI Frontier Markets Index.

This move brings the total number of NSE-listed companies in the index to five, including Safaricom, Equity Group Holdings, KCB Group and East Africa Breweries Ltd.

"The inclusion of Co-operative Bank of Kenya in the MSCI Frontier Markets Index and the addition of the four other companies in the MSCI Frontier Markets Small Cap Index is a significant boost for Kenya's equity market," said NSE Chief Executive Frank Mwiti in a statement yesterday.

The move is seen as a reflection of the success of the structural market reforms that have positively impacted Kenya's equity market, making it more efficient for global investors to invest in securities listed on the NSE.

The positive impacts are further reflected in the performance of NSE benchmark indices and the return of positive foreign investor inflows in the first half of 2024, said analysts.

The MSCI indices serve as benchmarks for institutional investors looking to gain exposure to frontier markets, and the inclusion of Kenyan companies is expected to increase their visibility and attractiveness to global investors.

According to the financial content website Investopedia, MSCI is best known for its benchmark indices—including the MSCI Emerging Market Index and MSCI Frontier Markets Index.

The company continues to launch new indexes each year.

The Frontier Market Index is used to track markets in countries that are considered more volatile and unpredictable than emerging markets.

This index focuses on 28 markets from the Middle East, Africa, South America, and Europe.

Some of the frontier regions with stocks included in this index are Vietnam, Morocco, Iceland, Romania, and Bahrain.