Morgan Stanley Capital International (MSCI), an American finance company, has incorporated the Co-operative Bank of Kenya in its MSCI Frontier Market Index, following the August 2024 Index Review.The move increases the visibility of Co-op Bank’s visibility in the global market.
Co-op Bank joins other Kenyan companies that have been on the MSCI Frontier Markets Index, including KCB Group, Safaricom, East Africa Breweries, and Equity Group Holdings.Also, MSCI included the Diamond Trust Bank, British American Tobacco, Kenya Reinsurance Corporation, and Kenya Electricity Generating Company in the MSCI Frontier Markets Small Cap Index.
The admission to the index presents a significant opportunity for Kenyan firms to increase their shareholder base and raise capital. Kenya could see inflows of foreign investments due to the inclusion of select firms in MSCI indices.
The development comes as the Nairobi Stock Exchange (NSE) aims to increase foreign portfolio flows. NSE’s CEO, Mr. Francis Mwiti, lauded the inclusion of additional firms in the MSCI index.
“The move will enable wider and deeper of Kenya’s equity market increasing the visibility of companies listed on the NSE and enhance their attractiveness to global investors as the indices serve as benchmarks for institutional investors looking to gain exposure to frontier markets.’’ commented Mwiti.
“The inclusion is equally a reflection of the success of the structural market reforms that are positively impacting Kenya’s equity market making it efficient for global investors to invest in securities listed on the NSE in Kenya,” his statement added.
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MSCI is one of the leading global index providers. The firm also offers support tools and services for investors. Its Frontier Markets Index comprises 213 constituents while Frontier Markets Small Cap Index comprises 367 constituents.
The MSCI index is subject to quarterly and semi-annual review. The reclassification, addition, or deletion of companies in the global indices are based on multiple criteria including the traded volume, the liquidity of the company’s share, the company’s turnover rates, and the firm’s size of investable capital.
Safaricom currently accounts for 48.16% of the total MSCI Kenya index while Equity Group Holdings comes in second position with 28.88%. East African Breweries and KCB Group hold 5.67% and 17.29%, respectively.
No Kenyan firm was demoted from the MSCI Frontier Markets Index following the August review.
