Morgan Stanley Capital International (MSCI) has added Co-operative Bank of Kenya Limited (COOP) and British American Tobacco (NSE:BATK) to the Frontier Markets Small Cap Index.
The MSCI Frontier Markets Indexes include large, mid-sized, capitalization companies and provide a broad representation of the equity opportunity set while taking investment requirements into consideration within each market.
According to Genghis Capital, Kenya is a top 5 constituent under the MSCI FM Index inclusive of Morocco, Kuwait, Bahrain and Vietnam.
“With the revision, to be effected from 29th May 2020, we do not expect that the index weightings changed substantially and subsequently do not expect major portfolio realignments by global funds in the FM basket. However, the upcoming November 2020 review could see major portfolio re-balancing” they add.
Genghis projects that Equity Group and EABL currently accounting for roughly 1 percent of the index, could be net gainers of weight in the index. Safaricom could gain a considerable share gain (currently at a weight of 3.5%) in the MSCI FM index.
The index lists what are regarded as blue-chip listed stocks from selected frontier markets of Asia, Middle East, Central, Eastern Europe, and Africa.
Inclusion in the index raises the visibility of a listed company among prospective investors seeking opportunities in frontier markets.
Other listed Kenyan companies include Safaricom Plc , KCB Group , Equity Group and East African Breweries Limited (EABL).
MSCI classifies 32 countries as Frontier Markets, 23 of which are included in the MSCI Frontier Markets Index. It compiles and periodically reviews influential indices tracked by global investment managers.