NAIROBI (HAN) April 20, 2016. Public Diplomacy & Regional Security News. Troubled Kenyan carrier Kenya Airways and Standard Chartered Bank have been dropped from a collection of 20 blue-chip companies trading on the Nairobi Securities Exchange (NSE) on the back of increased instability in earnings and mounting liabilities.
The NSE board voted Tuesday to remove the two companies from being part of the constituent counters of the NSE 20 share index and instead promoted Diamond Trust Bank (DTB) and CIC Insurance.
In a statement, the bourse said the changes are meant to ensure the benchmark index reflects the accurate picture of market performance.
The changes took effect immediately on Tuesday.
The NSE 20-Share index is a price weighted index which acts as a barometer of economic performance for the country.
It is calculated as an average of the top 20 best performing counters.
The constituent companies are selected based on their superior market performance in terms of market capitalization, shares traded, turnover and liquidity.
In addition these companies must have a minimum market capitalization of Ksh20 million ($ 198,000) and at least 20 per cent of its shares quoted on the NSE. They should also have superior profitability and dividend record.
The NSE 20-Share Index constituent companies include those from the Agricultural sector (Sasini Ltd), Commercial and Services Sector ( Nation Media Group, ScanGroup Ltd), Banking Sector (Kenya Commercial Bank, Cooperative Bank, Diamond Trust Bank, Barclays Bank, Equity Bank, CfC Stanbic Holdings), Manufacturing &Allied sector (East African Breweries Ltd, British American Tobacco Kenya and Construction (Athi River Mining, Bamburi Cement).
Others are the Energy and Petroleum sector (KenolKobil Ltd, Kenya Power, Kengen), Insurance Sector (British American Investments Company (Kenya) and CIC Insurance), the Telecommunications and Technology sector (Safaricom Ltd) and Investments Sector (Centum Investments).
In 2014, the Mumias Sugar Company (MSC), Uchumi Supermarkets and Kakuzi Ltd were replaced with British American Investments Company (Britam), Centum Investments and CfC Stanbic Holdings Ltd.