FTSE Russel lifts Nairobi equity mart

The Nairobi Securities Exchange (NSE) equity market has been re-classified from “restricted” to “pass” by the FTSE Russell Index Governance Board in a move that will boost the bourse, draw in foreign investment, enhance liquidity, and increase visibility globally.

The re-classification, that was effected last month will make it simpler for foreign investors to withdraw their money from Kenya, thereby enhancing the market’s appeal further.

Lifting of restrictions on index changes for Kenyan securities within FTSE Russell equity indices also increases their global visibility, potentially attracting more foreign investment.

The FTSE Russell Index Governance Board is responsible for overseeing the governance of the indices created by FTSE Russell, a leading global provider of benchmarking and investment analytics services. Their role is crucial in maintaining investor confidence and market efficiency.

The re-classification signals the improving health of Kenya’s equity market and boosts confidence among international institutional investors, which could stimulate investment activity and market liquidity.

As well, the inclusion of the NSE in FTSE Russell’s market cap-weighted equity indexes, which are widely used globally for various investment decisions, opens up more opportunities for investing in Kenyan securities.

David Wainaina, acting Chief Executive of the Nairobi bourse said the upgrade was a recognition of Kenya’s improving equity market and a sign of growing global investor confidence.

“We are delighted by the reclassification which a testament of the continued improvement in Kenya’s equity market and a demonstration of the confidence international institutional investors are placing in our market,” Wainaina said.

After an evaluation by the FTSE Russell board, it was determined that Kenya’s equity market had overcome issues that were preventing investors from easily withdrawing their money from Kenya. This led to the lifting of restrictions on Kenyan securities in the FTSE Russell equity indices from September 2023.

In 2021, the NSE introduced day trading to increase market liquidity and published an Environmental, Social, and Governance (ESG) manual to standardize reporting.

These steps have significantly contributed to the NSE’s modernization and its standing as a leading securities exchange in East and Central Africa.