NAIROBI, June 30 – The new AIG 27 share Index which becomes operational Tuesday represents 92 percent of market capitalisation compared to the previous 62 percent.,
According to AIG Investment Manager Peter Wachira the new index will better reflect market sector weightings and improve its representation of the stock market performance.
New stocks now included in the index are Safaricom, Equity Bank, Kenya Re and Kenol.
"We have been tracking the performance of the 4 stocks for a period of time and have seen that they trade more shares on average compared to the ones we have removed," Wachira said
"And also, Safaricom is currently the biggest share on the market controlling 25 percent and Equity bank 9 percent and without the inclusion of those two the index may not be redflective," he added.
Safaricom was listed in June 2008 and has a market capitalisation of Sh312 billion, the highest on the Nairobi Stock Exchange accounting for 25.2 percent of the stock market and is a good representative for the ICT sector.
Equity Bank has a market capitalization of Sh100 billion topping the list in the banking sector.
Kenya RE is a very liquid counter and actively traded with a market capitalisation of Sh10 billion while Kenol is now more liquid and actively traded with a market capitalization of Sh13 billion.
Among the ones dropped include National Bank of Kenya, CFC Bank, East African Portland and Total Kenya.
Meanwhile Wachira is assuring investors over what may seem as the dominance of the Safaricom share in the bourse in the last 3 weeks.
He said this should continue for the next couple of months until there are fewer numbers of speculators and long term investors are able to acquire more shares than they were allocated.
"I don’t think there is anything to be scared about with this kind of trading considering that Safaricom is the most profitable company in East Africa and should be a very stable share," said Wachira.
Meanwhile outgoing East African Cables Group CEO Mugo Kibati described the listing of his company on the 20 Share Index as a welcome accolade.
"The recent announcement by the NSE is a good move that means that EA Cables will henceforth be one of the companies that form the bell weather measure for the performance of the NSE," Kibati noted.
And he added,"by all means, this news calls for a celebration and demands that we renew our commitment to ensuring that we continue to enhance shareholder value."
Having displaced Sameer Africa, East African Cables has joined the NSE 20 Share Index which features leading local companies listed on the NSE.
About a week ago the Nairobi Stock Exchange announced some changes in the 20 Share and All Share Indexes.
In the 20 Share Index, Equity Bank replaced Diamond Trust Bank in the Finance and Investment Sector while East African Cables replaces Sameer Limited and Athi River Mining replaced Total Kenya in the Industrial and Allied Sector.