The Nairobi Securities Exchange (NSE) is planning to attract more investors from India, China and other countries in the Far East in a bid to boost market capitalization. The NSE is therefore keen to upgrade the market to a secondary emerging status in the next 18 months.

“Recognition as an emerging market is important because investors with a mandate to invest in emerging markets would be able to direct their investment flows into our market,” said Peter Mwangi, chief executive officer of the NSE.

The bourse is offering 66 million shares to the public at Sh9.5 each, as it hopes to raise Sh627 million ($7.12 million) which will be used to repay mortgage debt held by the NSE as well as invest in infrastructure. It will ensure a seamless introduction of new products on the market.

The NSE plans to introduce Exchange Traded Funds (ETFs), Real Estate Investment Trusts (Reits), the Derivatives Market. The funds left would serve as seed capital for setting up of the Derivatives Market in order to trade futures and commodities.

Kenya will join emerging economies like China, Chile, Egypt, Colombia, Indonesia, Malaysia, India and Turkey ranked by FTSE as secondary emerging countries, once NSE gets the upgrade.

FTSE divided the emerging markets into advanced and secondary categories. South Africa is the only African country in the Advanced Emerging countries status, according to FTSE. Other countries include Hungary, Brazil, Mexico, Poland, Taiwan and South Korea.

The upgrade is expected to attract high volume of investments into Kenya as the ‘favourable rating’ would position the East African country as an ideal destination for investment, Mwangi noted.

NSE is yet to meet the criteria for the upgrade to emerging market status, but Mwangi said the bourse has entered into discussions with FTSE (UK-based stock market index provider) and MSCI (US-based stock market index provider) on how its market can improve to meet their respective criteria for emerging markets, building on existing relationships with the rating agencies.

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