Russian investment bank Renaissance Capital (RenCap) has launched a stock index covering 11 markets in sub-Saharan Africa, reflecting the growing investor interest in the region.

Attracted by the vibrancy of the emerging African stock markets and the immense investment opportunities available in the continent, the multi-billion dollar Russian brokerage has ventured into Africa with Kenya's slated to be one of its key hubs. The RC SSA 50 index is made up of 50 equities and represents 62 percent of the total market capitalization of the domiciled sub-Saharan equity market, at US$61.3 billion, Renaissance Capital, also known as RenCap, said in a statement.

Amish Gupta, the head of Ren Cap's securities trading arm for Eastern Africa, told the Business Daily that the index is meant to allow a greater number of investors track the performance of counters in key Sub Saharan Africa equity markets. "Capital markets in Sub Sahara Africa are growing and becoming more interesting for both local and foreign investors," said Mr Gupta.

The index covers equities in Botswana, the West African regional stock exchange Bourse Regionale des Valeurs Monetaires (BRVM), Ghana, Kenya, Malawi, Mauritius, Namibia, Nigeria, Uganda, Zambia and Zimbabwe. The base date of the index is January 2, and the total dollar return of the index since inception is 39 per cent, compared with a gain of 29 per cent in the benchmark MSCI global emerging equity index.
Investors have shown an increasing interest in Africa as they search for higher returns within emerging markets, but lack of liquidity remains a deterrent.

RenCap, a 12-year old firm with brokering, private equity and a $4.5 billion asset management business, told Reuters earlier this year it plans to double its $500 million investment into Africa by next year and aims to help African firms raise capital on global markets. The firm recently won the bid for a seat at the Nairobi Stock Exchange, which now enables it to trade shares on behalf of investors. The RC SSA 50 index and the Nex Rubica Top 40 index are among a number of indices launched to track stocks' performance across Africa.
The Nex-Rubica methodology ranks shares with a minimum market cap of US$500 million and a free float of greater than 25 percent within each issuer.

It is a free float adjusted, market cap weighted index that aims to capture over 50 percent of the (publicly available) total market capitalization of stocks in the region. The Nex-Rubica index applies cross-ownership and local legal restriction screens to stocks with a market cap greater than one percent of each country's total. Component companies are adjusted for available float, unavailable strategic shareholdings and limitations to foreign ownership.

The indices serve as a way through which institutional investors and 600 of Africa's largest companies can access liquidity provided by a huge network of on the ground brokers and dealers spread across Africa.

The Top 40 companies selected to represent the key recipients of increased capital flow into Africa are led by China, and followed by India as well as US and international banks and, lately, hedge funds.