The Morgan Stanley Capital International (MSCI) index has added three NSE counters to its small cap index bringing the visibility of the stocks to foreign investors.
The three counters include Kenya Power, Carbacid Investments Plc and Bamburi Cement Plc.
The inclusion of the three stocks brings the number of Kenyan companies on the MSCI small cap index constituents to seven adding to BAT Kenya Plc, Diamond Trust Bank Kenya, KenGen and Kenya Re.
A further five listed firms sit on the MSCI main frontier market index including Safaricom Plc, Equity Group, KCB Group, East Africa Breweries Plc and Co-operative Bank of Kenya.
The increased number of NSE listed stocks on the global indexes is expected to increase the visibility of the counters to foreigners, particularly those relying on indexes to invest in emerging and frontier markets such as Kenya.
MSCI is a leading provider of services for the global investment community, enabling investors to understand and analyse key drivers for their portfolios across markets in both advanced and frontier markets.
NSE says the addition of the three counters to the index is representative of the underlying growth potential in Kenyan equities.
“The addition of three more companies to the MSCI Frontier Markets Small Cap Index underscores the recognition by MSCI of the huge potential growth of Kenya’s listed equities. This increased representation will offer the global investment community greater exposure to Kenya’s listed companies and drive significant capital inflows to NSE,” noted NSE chief executive officer Frank Mwiti.
“As the primary securities exchange in the region, NSE will continue engaging the investor community to ensure listed companies continue attracting global and regional investors.”
The MSCI Frontier Markets Small Cap Index captures small cap representation across 28 frontier market countries.
The index has over 381 constituents covering about 14 percent of the free-floating adjusted market capitalisation.
The performance of the small caps index has regularly beaten the larger main frontier index (MSCI Frontier Markets) but trails it on a year-to-date basis with a net loss of 6.15 percent against a return of 6.08 percent in dollar terms for the latter.
The small caps index nevertheless beat the main frontier index last year posting a return of 14.42 percent in 2023 compared to 7.34 percent.
Stocks from Vietnam, Bangladesh and Pakistan make up the highest constituents of the MSCI small caps index by country weighting while financial sector counters top the index by sector weighting.
