Bourse starts index for top 10 firms

The Nairobi Securities Exchange (NSE) has introduced a new index, NSE 10, that will be tracking the performance of the equities market in addition to the existing other indices.

The index, an addition to the NSE 25, which is a market capitalisation-weighted index, will include Safaricom, Equity Group, KCB Group, Co-operative Bank of Kenya, Absa Bank Kenya, East African Breweries, and NCBA Group.

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Others on the list are Kenya Electricity Generating Company (KenGen), Kenya Re and Centum Investment, with the 10 companies currently valued at 75.5 percent of the Sh1.53 trillion NSE market capitalisation.

NSE said the new index will be based on market capitalisation float-adjusted methodology, with the constituent companies’ list being reviewed semi-annually.

The NSE 10 Index has been benchmarked at 1,000 points and was off to a losing start, shedding 8.36 points to close Monday at 991.64 points.

NSE has also introduced another index called, the NSE Bond Index (NSE-BI) that will be tracking the bonds market.

“The development of the new equity index, which will adopt a market capitalisation float-adjusted methodology and the new Bond Index, will enhance our investors’ ability to effectively monitor the performance of listed securities on the NSE,’’ said Geoffrey Odundo, the chief executive of the NSE.

The NSE 10 index will be part of the end-of-day reports that will be shared with investors daily, in addition to the NSE 20 and NSE 25.

NSE-BI, which is based on the benchmark government bonds listed on the NSE, will be a weekly index and will be distributed together with the NSE Yield curve.

It is expected that NSE-BI will form part of a fixed-rate future contract that will be issued on the NSE derivatives market. This index will be available from October 1.

NSE has also reviewed the list of NSE 20 companies, dropping WPP Scan Group, Nairobi Securities Exchange PLC and Diamond Trust Bank Kenya from the list. CIC Insurance Group, Bank of Kigali Group and I&M Holdings are the new entrants.

The NSE 20 Share index is a price weight index, calculated as a mean of the top 20 best performing counters.

Entrants to the NSE 20 are selected based on weighted market performance during the review period based on among others trading activity measures.

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The company must also have at least 20 percent of its shares quoted at the NSE.

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