Between January and June, the NSE 20-Share Index gained 11 per cent from 4,141.43 points to 4,598.16 points. FILE
Kenya is among global frontier economies with the highest return on investors’ capital, a Citi research report has said.
The report titled Call of the Frontier Revisited: On the Right Track to Be Tomorrow’s Emerging Markets says that Kenya is among countries on the path to becoming emerging markets, which is a rank higher than frontier market status.
“The frontier markets with the highest return on equity levels include Kenya, Pakistan and Nigeria (all above20 per cent),” says the report dated September 2013.
Economic growth, access to financial services and business opportunities for companies were the three key parameters that researchers at Citi used to rank markets.
One of the biggest attractions for Kenya are gains made on the Nairobi Securities Exchange (NSE) over the first six months of the year, which are larger than peer markets and those of developed economies.
Between January and June, the NSE 20-Share Index gained 11 per cent from 4,141.43 points to 4,598.16 points while market capitalisation increased by Sh340 billion from Sh1.28 trillion to Sh1.62 trillion over the same period.
Growth on the NSE accelerated after the peaceful conclusion to the General Election in March, which ushered back foreign investors.
The report, however, said that the Kenya being an exporter of horticultural produce to Europe whose economy is struggling, makes it vulnerable to shocks.
“As such, a period of prolonged stagnation in the developed world may prove a difficult backdrop for frontier markets to grow in. Take Kenya, which has close ties to the Eurozone through exporting produce such as tea, fruit, vegetables and flowers; and attracting substantial European tourism inflows,” says the report.
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