Leading index compiler Morgan Stanley Capital International (MSCI) announced changes to the MSCI Frontier Market Index in its November 2020 Semi-Annual Review, in particular two additions and ten deletions from the index.

Additions

KCB Group (Kenya)

Kenya’s KCB Group, one of the largest banks in the country, will be included in the MSCI Frontier Markets Index after the index compiler promoted the company from the MSCI Small Cap Index after satisfying the necessary criteria for it to be moved. The bank was demoted to the small cap index in the November 2019 Review and will welcome the news that it will once again be included in the main Index.

KCB Group currently the fourth largest constituent in the Nairobi Securities Exchange All Share Index with a weight of 5.5% and is behind the likes of Safaricom (59.9%), Kenya Equity Group (6.4%) and East African Breweries (6.1%).

Ignitis Grupe (Lithuania)

Ignitis Grupe, a Lithuanian renewable energy-focused holding company, is the second company to be included in the MSCI Frontier Markets Index. Despite the company’s share price declining by just over 12% since its initial public offering (IPO) (where is raised EUR 450 million) on Tuesday 6th October, MSCI have decided to include it in the main index. The company will release its financial results for the first nine months of 2020 on Friday 13th November.

Ignitis will replace the outgoing Bank of Siauliu’s position in the MSCI Frontier Markets Index, with the latter moving to the MSCI Frontier Markets Small Cap Index.

 

Deletions

The list of companies that were removed from the Index are below:

1. Agility (Kuwait) – removed due to Kuwait’s market upgrade.
2. Boubyan Bank (Kuwait) – removed due to Kuwait’s market upgrade.
3. Burgan Bank (Kuwait) – removed due to Kuwait’s market upgrade.
4. Gulf Bank (Kuwait) – removed due to Kuwait’s market upgrade.
5. Kuwait Finance House (Kuwait) – removed due to Kuwait’s market upgrade.
6. Mabanee Company (Kuwait) – removed due to Kuwait’s market upgrade.
7. Mobile Telecom Company (Kuwait) – removed due to Kuwait’s market upgrade.
8. National Bank of Kuwait (Kuwait) – removed due to Kuwait’s market upgrade.
9. Bank Dhofar (Oman) – moving to the MSCI Frontier Markets Small Cap Index
10. Bank of Siauliu (Lithuania) – moving to the MSCI Frontier Markets Small Cap Index

Kuwait’s upcoming promotion to the Emerging Market’s category means that equities from the country will represent eight out of the ten companies that will be removed from the MSCI Frontier Markets index. MSCI have confirmed that it will be upgraded as of the close of Monday 30th November 2020 as part of the November 2020 Semi-Annual Index Review.

Completing the list are Oman’s Bank Dhofar and Lithuania’s Bank of Siauliu, where both will join the MSCI Frontier Markets Small Cap Index and will not longer be represented in the main Index.

 

Small Cap Index

There will be 12 additions to and 17 deletions from the MSCI Frontier Markets Small Cap Index. Two of the additions – Bank Dhofar (Oman) and Bank of Siauliu (Lithuania) – were previously in the standard MSCI Frontier Market Index. Vietnam has the most additions (4), followed by Morocco (2) and Bahrain (2).

1. Auto Hall (Morocco)
2. Boissons Du Maroc (Morocco)
3. Dialog Axiata (Sri Lanka)
4. APM Terminals Bahrain (Bahrain)
5. Gulf Finance House (Bahrain)
6. Bank Dhofar (Oman) – previously in the MSCI Frontier Markets Index.
7. Atlantic Grupa (Croatia)
8. Bank of Siauliu (Lithuania) – previously in the MSCI Frontier Markets Index.
9. An Phat Holdings (Vietnam)
10. Hai Phat Investment (Vietnam)
11. Hoa Sen Group (Vietnam)
12. Khang Dien House (Vietnam)

Among the securities deleted from the index, Kuwaiti stocks will no longer be represented after the country’s upgrade to the Emerging Markets category. As a result, Kuwait has the most removals from the index (12), followed by Mauritius (2), Sri Lanka (1), Bahrain (1) and Kenya (1). The full list of companies removed from the Small Cap Index is below:

1. Hatton National Bank (Sri Lanka)
2. Gulf Finance House (AE) (Bahrain)
3. Alimtiaz Investment Co. (Kuwait)
4. Aviation Lease and Finance (Kuwait)
5. Boubyan Petrochemicals (Kuwait)
6. Human Soft Holding (Kuwait)
7. Integrated Holding (Kuwait)
8. Jazeera Airways (Kuwait)
9. Kuwait International BK (Kuwait)
10. Kuwait Project Co Holdings (Kuwait)
11. Mezzan Holding (Kuwait)
12. National Ind Grp Holding (Kuwait)
13. National Real Estate Co (Kuwait)
14. Warba Bank (Kuwait)
15. KCB Group (Kenya) – upgraded to the MSCI Frontier Markets Index.
16. New Mauritius Hotels (Mauritius)
17. Terra Mauricia (Mauritius)

 

Other Announcements

MSCI also announced changes in two of its standalone indexes:

1. Iceland – there will be one addition (Ossur) to the MSCI Iceland Index.
2. Zimbabwe – there will be one addition (Innscor Africa) to and one deletion (Econet Wireless Zimbabwe) from the MSCI Zimbabwe Index.

MSCI also highlighted that there will be no changes in any securities classified in Bangladesh, Lebanon or Nigeria as it continues to observe market accessibility issues in these countries before making a final decision. The weights of these countries in the MSCI Frontier Markets Index will remain unchanged as a result.

 

All changes will be implemented as of the close of Monday 30th November 2020. Articles on previous MSCI Reviews can be found below:

August 2020

May 2020

February 2020

November 2019