Co-operative Bank and British American Tobacco have been added to the MSCI Frontier Markets Index, which tracks performance of blue-chip stocks in the country.
They join Safaricom, Equity Bank and Kenya Breweries Limited, which have been outperforming the index in dividend yield, price to equity and price to book value.
The MSCI Kenyan Index had dipped following the March sell-off after reports of the first coronavirus case in Kenya as foreign investors moved to safer assets. However, it has since rebounded, gaining 7.1 per cent in April, more than the 6.7 per cent on the MSCI frontier market index.
“The following are changes in constituents for the MSCI Frontier Markets Small Cap Indexes, which will take place as of the close of May 29, 2020. MSCI Kenya Index additions British American Tobacco Ke and Co-op Bank Of Kenya,” the New York-based finance company said.
The index helps global investors build and manage better portfolios through research-based tools and services, providing clients with insights into drivers of risk and performance, broad asset class coverage to bring investment strategies to market.
The MSCI Frontier Markets Index includes what are regarded as blue chip listed stocks from selected frontier markets of Asia, Middle East, Central and Eastern Europe and Africa. It classifies 32 countries as frontier markets.
Inclusion in the index raises the visibility of a listed company among prospective investors looking for opportunities in frontier markets, especially at a time foreigners are seeking to re-enter the market as coronavirus restrictions begin to be lifted.
Kenya’s stock prices have been recovering on demand by buyers targeting lowly priced counters to cash in on post-coronavirus recovery.
The market has also been boosted by the dividend paying season as investors rush to gain from 20 counters that have declared returns to shareholders.
Post-coronavirus strategy for foreign investors with African portfolios favoured Kenya, with South Africa witnessing a decline while Nigeria faces a crash in global oil prices.
At 60.6 per cent participation, according to the Capital Markets Authority report for the first quarter, the Kenyan market continues to be highly driven by foreign participation as they seek higher yields in alternative assets within emerging markets.
