Kenya is the most industrialized economy in East Africa, although it has no significant natural resources. It also has ambitious plans for the future of the country. For those interested in investing in Kenya, we analyze its most important stock market indices.
With a population of around 60 million people and a government with very ambitious plans for the future of the country, Kenya´s economy is set to become more important in the decades to come.
Unlike many other African countries, Kenya has hardly any mineral or energy resources under its soil. That is something that a priori puts the country at a disadvantage. However, there are far more important things than natural resources to build a prosperous economy.
A functioning legal system that protects private property is critical. And Kenya is able to offer a stronger rule of law to investors than most of its neighboring countries. Thanks to this, Kenya has managed to become the most industrialized country in East Africa.
The most important stock exchange in Kenya is located in its capital, Nairobi. The exchange is known as NSE, short for Nairobi Securities Exchange, where just under 100 companies are listed.
For those who want to invest their capital in Kenya without having to select individual stocks, we will analyze the country´s three most important stock market indices.
NSE All Share
The main index of the Nairobi Stock Exchange is the NSE All Share. It is composed of all the companies listed in the country. Hence, we can say it is the most inclusive of all Kenyan indices.
Within the index, stocks are weighted based on their market capitalization adjusted for free float. As a result, the larger companies tend to dominate.
We should mention that most companies in the NSE All Share index are small. For this reason, it is not a good index for passive investors to replicate. However, it is a good indicator to assess what is happening in the Kenyan stock market.
If you want to find more information about this index, you can visit the official website of the Nairobi Stock Exchange.
FTSE NSE Kenya 15
FTSE NSE Kenya 15
For those who want to invest passively in Kenya´s stock market, the FTSE NSE Kenya 15 index is probably the best alternative.
The FTSE NSE Kenya 15 is an index born from the partnership between the company FTSE Russell, a subsidiary of the London Stock Exchange that calculates and publishes stock indices, and the Nairobi Stock Exchange. It was introduced in 2011 with an initial value of 100 points. We can find several versions of it, including in local currency and US dollars.
This index includes the 15 largest listed companies in the country. Due to the market structure in Kenya, approximately half of the index´s market capitalization is concentrated in the financial sector. Some of its biggest companies are Equity Bank and KCB Group.
Those looking for more information about the FTSE NSE Kenya 15 can download some documentation directly from the FTSE Russell website by clicking here.
Finally, the American company MSCI also calculates a stock market index for Kenya. This index is called MSCI Kenya and is composed of all Kenyan stocks that are part of the global stock market index for developing nations MSCI Frontier Markets.
Although this index can give some visibility to listed companies in Kenya, we should mention that very few Kenyan stocks manage to meet the minimum size threshold to be part of it. As a consequence of that, it is a highly concentrated index.
For additional information about this index, you can visit the MSCI website.
I hope you found this post about stock market indices in Kenya useful. To learn about stock indexes in other promising countries, visit this section:
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