NSE introduces new FTSE indices

November 8, 2011
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NSE Chief Executive Officer Peter Mwangi/ FILE
NAIROBI, Kenya, Nov 8 – The Nairobi Securities Exchange (NSE) has introduced indices based on those of the FTSE Group as it seeks to improve the attractiveness of the local bourse to foreign investors and increase its vibrancy.

The launch of the FTSE NSE Kenya index series will consist of two new series bringing the total number of indices to five.

NSE Chief Executive Officer Peter Mwangi said the introduction of new indices reflects the growing interest in domestic investment and diversification opportunities at the Kenyan capital markets.

“The new indices will run concurrently with the NSE 20 Share and NSE All Share Indices. They will act as a gauge by which our investors can measure the performance of their portfolios,” Mwangi said.

The FTSE NSE Kenya 25 Index is a tradable index reflecting the performance of the 25 most liquid stocks on the Nairobi Securities Exchange while the FTSE NSE 15 Index is a tradable index reflecting the performance of the largest 15 stocks, ranked by full market capitalisation.

The top five constituents of the FTSE NSE Kenya 25 Index are East African Breweries, Safaricom, Equity Bank, Kenya Commercial Bank and Barclays Kenya with a total 69.19 percent weighting.

Mwangi said the two tradable indices will be priced in dollars and Kenyan shillings, and will initially be based on the NSE-20 Share Index and the NSE-All Share Index.

“The FTSE NSE Kenya Index Series is built to FTSE’s renowned standards of index design, which emphasise transparency, tradability and strong governance, with index data available across a range of global vendor platforms. They reflect the growing interest in new domestic investment and diversification opportunities in Kenya,” the CEO said.

Mwangi said the NSE together with FTSE also plan to launch a government bond index early next year.

He added that the new indices would pave way for the establishment exchange-traded funds (ETF) on the East African bourse.

An ETF comprises a basket of assets, usually the main constituents of a major share market index, and can be traded on an exchange, sold short or be bought on margin and trade like stocks and allow investors to diversify their risk over a broad spread of assets.

“It is a crucial part of the efforts of the Nairobi Securities Exchange to evolve into a full service securities exchange which supports trading, clearing and settlement of equities, debt, derivatives and other associated instruments,” Mwangi said.

FTSE operates such indices as the FTSE 100 in Britain. In Africa, it runs indices in Morocco and South Africa. It also operates ETFs in countries including China, Germany, Japan, and the United States.

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