Morgan Stanley Capital International (MSCI) has announced changes in the Frontier Markets Index in its latest review for November 2019 which sees four new securities added – all banking sector stocks – and eight removed.

Additions

Commercial Bank of Ceylon (Sri Lanka)

Commercial Bank (ComBank) of Ceylon is one of the leading commercial banks in Sri Lanka and has been rated as the best bank in the country 19 times by USA-based Global Finance Magazine.

ComBank will subsequently move from MSCI’s small cap Frontier Market Index to the main Index.

 

Nova Ljubljanska Banka (Slovenia)

Nova Ljubljanska Banka is the second bank to be added to the MSCI Frontier Market Index in the November 2019 review. It is a subsidiary of NLB Group, which is the largest banking and financial group in Slovenia.

Last year, Slovenia’s government offered up to 59% (eventually increasing to 75% by the end of 2018) of the shares in the bank in an initial public offering (IPO), prompting rival index provider FTSE Russell to fast track it into the FTSE Frontier Markets Index.

 

Ho Chi Minh City Development Bank (Vietnam)

Ho Chi Minh City Development Bank (HD Bank) is a large commercial bank based in Vietnam that provides numerous services for its individual and corporate clients. The bank’s $300 million IPO, which happened last year, was the second largest banking IPO in Vietnamese history after Vietcombank’s $463 million IPO in 2007.

The inclusion of an additional Vietnamese company in the MSCI Frontier Markets Index will provide a further boost in the country’s quest to be promoted to an Emerging Market, solidifying its position as the largest country in the index after Argentina’s recent promotion and Kuwait’s upcoming upgrade.

Komercijalna Bank Belgrade (Serbia)

The final company added to the index is Belgrade-based Komercijalna Banka (KomBank) with a market cap of just over EUR 420 million. Besides Serbia, the bank also operates in neighbouring countries of Montenegro and Bonsia and Herzegovina.

Serbia’s government is currently in the process of offering its 83.23% share of the company to the market in a bid to privatise the bank.

 

Deletions

The following securities were removed from the MSCI Frontier Markets Index (five will be moved to the MSCI Frontier Markets Small Cap Index):

1. Jordan Islamic Bank (Jordan) – moving to the MSCI Frontier Markets Small Cap Index
2. Ceylon Tobacco Company (Sri Lanka)
3. Boubyan Petrochemicals (Kuwait) – moving to the MSCI Frontier Markets Small Cap Index
4. BLOM Bank (Lebanon) – moving to the MSCI Frontier Markets Small Cap Index
5. Ecobank Transnational (Nigeria) – moving to the MSCI Frontier Markets Small Cap Index
6. FBN Holdings (Nigeria) – moving to the MSCI Frontier Markets Small Cap Index
7. KCB Group (Kenya)
8. Aerodrom Nikola Tesla (Serbia)

 

Small Cap Index

There will be 13 additions and 17 deletions from the MSCI Frontier Markets Small Cap Index. Most of the additions are companies that have been “demoted” from the MSCI Frontier Markets Index (as indicated in the section above). Nigeria has the most additions (3), followed by Bangladesh (2) and Kuwait (2). The full list of additions are:

1. Hightech Payment Systems (Morocco)
2. Jordan Islamic Bank (Jordan) – previously in MSCI Frontier Markets Index
3. Aviation Lease and Financial (Kuwait)
4. Boubyan Petrochemicals (Kuwait) – previously in MSCI Frontier Markets Index
5. Dangote Flour Mills (Nigeria)
6. Ecobank Transnational (Nigeria) – previously in MSCI Frontier Markets Index
7. FBN Holdings (Nigeria) – previously in MSCI Frontier Markets Index
8. OmInvest (Oman)
9. National Life Insurance (Bangladesh)
10. Singer Bangladesh (Bangladesh)
11. Petrokemija (Croatia)
12. KCB Group (Kenya) – previously in MSCI Frontier Markets Index
13. Aerodrom Nikola Tesla (Serbia) – previously in MSCI Frontier Markets Index

Among the securities deleted from the index was Commercial Bank of Ceylon, which moved up into the MSCI Frontier Markets Index. Bangladesh has the most companies removed from the index (5), followed by Nigeria (3), Morocco (2) and Kenya (2). The full list of companies removed from the Small Cap Index are below:

1. Delta Holdings (Morocco)
2. Saham Assurance (Morocco)
3. Commercial Bank Ceylon (Sri Lanka) – moving to MSCI Frontier Markets Index
4. Khaleeji Commercial Bank (Bahrain)
5. International Breweries (Nigeria)
6. Oando (Nigeria)
7. Total Nigeria (Nigeria)
8. Oman Flour Mills (Oman)
9. Al Arafah Islami Bank (Bangladesh)
10. BSRM Steels (Bangladesh)
11. Islami Bank Bangladesh (Bangladesh)
12.  One Bank (Bangladesh)
13. Padma Oil Company (Bangladesh)
14. Barclays Bank of Kenya (Kenya)
15. Co-Op Bank of Kenya (Kenya)
16. Poulina Group Holding (Tunisia)
17. Hoang Anh Gia Lai Agriculture (Vietnam)

 

All changes will be implemented as of the close Tuesday 26th November 2019. Summaries for the previous quarterly reviews can be found below:

May 2019

August 2019