Investors at the Nairobi Securities Exchange (NSE) saw their wealth rise by 4.7 percent, or Sh138.5 billion, in January, extending the momentum from last year when investor wealth surged by a record Sh1 trillion, or 51.8 percent. Market capitalisation closed the month at Sh3.083 trillion, up from Sh2.945 trillion at the start of the year. Gains were led by Safaricom, Co-operative Bank of Kenya, Absa Bank Kenya, and NCBA Group, which collectively added Sh100.8 billion in value.
Last year’s historic growth was driven by strong demand for equities as returns on alternative assets, including government securities, declined with falling interest rates. Yields on reopened 20- and 25-year Treasury bonds sold in January stood at 12.87 percent and 14.18 percent, while Treasury bill rates ranged from 7.7 percent to 9.2 percent, making equities’ returns highly attractive even just one month into the year. The reallocation of funds into equities is expected to continue amid expectations of further rate cuts by the Central Bank of Kenya.
“Investors are now focusing on large, fundamentally strong companies rather than speculation as market gains normalise,” said Melodie Ndanu, research analyst at Standard Investment Bank. She added that the bullish outlook is likely to persist, supported by anticipated new listings, including government parastatals, and increased retail participation through initiatives like fractional trading.
Local investors have also ramped up activity after years of subdued participation, offsetting net sales of Sh1.08 billion by foreign investors in January. This trend is expected to deepen with the NSE’s first major IPO in nearly two decades—the Sh106.3 billion sale of a 65 percent government stake in Kenya Pipeline Company.
In January, small-cap stocks led early gains, with TransCentury and subsidiary East Africa Cables rising 246.2 percent and 128.7 percent respectively, and Home Afrika up 86.5 percent. However, TransCentury and EA Cables were later suspended due to receivership, while other high-flying small caps like Flame Tree Group, Uchumi Supermarkets, and Kenya Power had limited impact on overall market valuation. The NSE added 2.3 percent, or Sh44 billion, to Sh1.983 trillion in January despite multiple small-cap gains above 50 percent.
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This year, smaller stocks have seen more modest growth, with Kenya Airways and Uchumi standing out at 36.8 percent and 23.3 percent gains. Instead, larger stocks have dominated the headlines amid corporate developments. Safaricom added Sh50 billion in market cap, rising 4.4 percent to Sh1.135 trillion, while Co-op Bank gained Sh19 billion, or 13.6 percent, to Sh140.5 billion. Absa and NCBA added Sh17.7 billion and Sh14 billion respectively, closing at Sh134.15 billion and Sh138.39 billion.
Proposed equity acquisitions by South African firms Vodacom and Nedbank, alongside Diageo’s agreement to sell its 65 percent stake in EABL to Japan’s Asahi Holdings, have boosted valuations. The Treasury is also planning to sell a 15 percent stake in Safaricom to Vodacom for Sh204.3 billion. The announcements triggered share price spikes despite Asahi cautioning that its EABL purchase price of Sh590 per share should not be directly compared to market prices.
Attention now turns to full-year bank financials for 2025, with dividend announcements expected to influence share prices. On Friday, EABL reported a 37.6 percent rise in net profit to Sh11.16 billion for the half-year to December 2025, and increased its interim dividend by 60 percent to Sh4 per share, sending its share price up 5.4 percent to Sh258.50.
