In a move that boosts the visibility of Kenyan equities for international investors, Morgan Stanley Capital International (MSCI) has added two Nairobi Securities Exchange (NSE) listed firms- CIC Insurance Group Plc and Williamson Kenya Plc- to its Frontier Markets Small Cap Index.
The inclusion of the two firms into MSCI, which is a leading provider of services for the global investment community, comes amid a period of a remarkable bull run for the NSE, which recently saw its market valuation surpass KES 3 trillion for the first time in 7 years. The rally, which began last year and was turbocharged by Safaricom’s profit announcement, has been largely driven by local institutional investors as foreign participation has waned. On the day the milestone was reached, giants like Safaricom and KCB were instrumental in pushing the market over the KES 3 million mark. Furthermore, this development is also significant as it occurs against a backdrop of reduced foreign investor participation.
The addition of these firms brings the total number of NSE-listed stocks on MSCI’s various indices to seven, following the inclusion of other firms like Kenya Power, Carbacid Investments Plc, Bamburi Cement Plc and Housing Finance. Other firms like Standard Chartered Bank joined the MSCI main frontier market index that had Safaricom Plc, Equity Group Holdings, KCB Group Plc, East African Breweries Plc and Cooperative Bank of Kenya.
The MSCI Frontier Markets Small Cap Index captures small cap representation across 28 frontier market countries.
Analyst view on the MSCI Endorsement.
Analysts attribute this surge to low return on fixed income assets like treasury bills, which have pushed investors towards equities, resulting in a 56.9% return for the NSE since the start of the year and increasing paper wealth By KES 1.1 trillion. The MSCI additions are expected to counter the trend of reduced foreign investment by attracting those international players who rely on such indices to guide their investments in frontier markets like Kenya.
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