New York-based Morgan Stanley Capital International (MSCI) Inc has added two more Kenyan-listed companies to its frontier markets indices, providing a major boost to the Nairobi Securities Exchange (NSE) as it looks for ways to sustain the growth momentum it started in 2024 after five consecutive years of decline.

The global, financial, research and investment advisory firm has added Standard Chartered Bank Kenya to its frontier markets index in its latest index review for global markets, joining Cooperative Bank, Safaricom, Equity Group, East African Breweries Ltd (EABL) and KCB Group.

It has also added housing financier HF Group to its frontier markets small cap index, joining BAT Kenya, KenGen, Kenya Re and DTB Group.

Read: How bank stocks breathed life into Nairobi Securities Exchange in 2024The latest changes will take effect after the close of business on February 28, 2025, MSCI said in a statement on February 11.

The inclusion of the additional stocks expands the pool of stocks visible to foreign investors on the NSE, potentially boosting foreign inflows at a time when the market has generally seen net outflows from offshore investors.

MSCI conducts quarterly reviews of its indices every February, May, August and November, allowing it to add or remove constituents and adjust their weighting within an index.

The reviews are designed to give investors an up-to-date picture of the state of a stock market, allowing them to make informed decisions.

The MSCI index tracks the performance of global equity, bond and real estate markets and advises foreign institutional investors, including pension funds, on which markets to invest in.

It also classifies markets as developing, emerging, frontier and stand-alone.

Trading activity on the NSE rebounded in 2024 after five consecutive years of decline, buoyed by increased investor appetite for banking stocks, relative stability in the shilling exchange rate and the government's repayment of a $2 billion Eurobond, which averted a potential default and rekindled foreign investor confidence in the economy.“In 2024, the Kenyan economy experienced a significant development that contributed to a macroeconomic rebalancing, gradually positioning the nation on a stable and sustainable growth trajectory,” said NSE CEO Frank Mwiti.“A key milestone was the timely repayment of the $2 billion Eurobond, which played a pivotal role in boosting investor confidence and alleviating concerns about potential default risks. This positive shift spurred heightened economic activity throughout the year.”Read: NSE targets higher foreign inflows on improved access to currencyOfficial data from the NSE shows that market turnover grew by 20 percent to Ksh105.23 billion ($815.73 million) from Ksh88.23 billion ($683.95 million) in 2023, marking the first annual growth in equity trading activity since 2018.

The last time the NSE recorded a positive annual equity market turnover was in 2018, when it grew to Ksh175.65 billion ($1.36 billion) from Ksh171.61 billion ($1.33 billion) in 2017.

Market turnover indicates how much trading activity took place in the market as a whole, or in individual stocks, on a given business day.

Share turnover is a measure of liquidity, which indicates the relative ease with which an investor can easily convert a stock into cash.

The equity market recovered in 2024, reversing years of decline, with the market value of listed shares rising to Ksh1.9 trillion ($14.72 billion) from Ksh1.4 trillion ($10.85 billion) in 2023.

The benchmark indices also rebounded significantly, with the NSE 20-share index gaining 33.94 percent (509.49 points) to close the year (2024) at 2010.65, while the NSE All Share Index rose 42.96 percent (1,022.57 points) to 3,402.8 over the same period.

The NSE Bond Market marked a significant milestone by crossing the Ksh1 trillion ($7.75 billion) mark in cumulative turnover (January 2 to August 21, 2024) for the first time in the history of the bourse as a result of strategic bond reforms including the implementation of the hybrid fixed income market.

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