An index as explained in our earlier article is a sample or portfolio of stocks representing the entire stock market. Investors use indexes to track the performance of the stock market.

The NSE (Nairobi Securities Exchange) 20 share index is used to track the performance of the NSE equities (shares) market.

*The NSE has two markets, the equities market where shares are traded and the bond market where bonds (papers issued by the government and companies as a means of borrowing money) are traded.

The NSE 20 Share Index is a price weight index calculated as a mean of the shares of 20 public, listed companies. They are selected based on a weighted market performance during the period under review based the following criteria:

1. Trading activity measures weighed in the ratio of 4:3:2:1. I.e Market Capitalization 40%, Shares traded 30%, Deals/liquidity 20%, and turnover 10%.

2. A company must have a free float of at least 20%.

3. Must have a minimum market capitalization of Kshs. 20 million.

4. A company should ideally be a blue chip with superior profitability and dividend record.

Currently the following companies make up the NSE 20 share index. The list includes the sector in which the companies are found.

Agricultural Sector

• Sasini Limited

Commercial & Services Sector

• Kenya Airways Limited
• Nation Media Group
• Scangroup Limited

Investment Sector

• Centum Investment Company Ltd

Banking Sector

• Kenya Commercial Bank Limited
• The Cooperative Bank of Kenya Limited
• Standard Chatered Bank Limited
• Barclays Bank Limited
• Equity Bank Limited
• CfC Stanbic Holdings Limited

Manufacturing & Allied Sector

• East African Breweries Limited
• British American Tobacco Kenya Limited

Construction & Allied Sector

• Athi River Mining Limited
• Bamburi Cement Limited

Energy & Petroleum Sector

• KenolKobil Limited
• Kenya Power Limited
• Kenya Electricity Generating Company Limited

Insurance Sector

• British-American Investments Company (Kenya) Limited

Telecommunications & Technology Sector

• Safaricom Limited

The NSE reviews the constituent companies of the NSE 20 share index from time to time. Some companies are dropped and others added to the list.