Market data displayed on trading screens at the NSE (Photo: Nairobi Securities Exchange)
The rally at the Nairobi Securities Exchange (NSE) is being shaped by a different set of players this year, with gains increasingly driven by large, established companies rather than the speculative surges that dominated trading in the past.
In January, the total value of listed shares rose by about Sh138.5 billion, lifting overall market capitalisation to roughly Sh3.08 trillion. What stood out wasn’t just the increase, but where it came from.
Much of the rise was concentrated in a handful of heavyweight stocks. Safaricom, Co-operative Bank, Absa Bank, and NCBA Group together added nearly Sh101 billion in value during the month. Safaricom alone contributed about Sh50 billion, while Co-op Bank added close to Sh19 billion. Absa and NCBA likewise combined for roughly Sh32 billion.
When giants like these move, the whole market tends to follow. Unlike smaller stocks, whose sudden changes have limited ripple effects, gains in large firms can lift the NSE as a whole. That’s why January’s rally looked stronger and more stable than previous ones.
Last year, several small-cap stocks grabbed headlines with huge price jumps. While impressive, these gains didn’t add much to the overall market and were often short-lived. This year, investors are focusing more on companies that deliver steady profits and have a proven track record.
One factor behind this shift is the changing interest rate environment. Returns on government securities have eased as borrowing costs fall. In January, long-term Treasury bonds offered annual returns of between 12.9 percent and 14.2 percent, while Treasury bills ranged from about 7.7 percent to 9.2 percent.
By comparison, shares at the NSE delivered gains equivalent to nearly half of those annual bond returns in just one month, making equities an increasingly attractive option.
Investor participation is also evolving. Foreign investors were net sellers of shares worth about Sh1.08 billion in January, but local investors stepped in, supporting prices and reducing the market’s reliance on foreign capital.
Confidence has been further boosted by major corporate deals. Safaricom and NCBA are linked to proposed acquisitions by South African firms, while East African Breweries Limited (EABL) has drawn attention after plans by its majority shareholder to sell its stake to a Japanese buyer. These developments prompted investors to reassess company values, pushing share prices higher.
New listings are also attracting attention. The government is currently selling a 65 percent stake in Kenya Pipeline Company, a deal valued at about Sh106.3 billion. It is set to become the largest initial public offering in nearly two decades and is expected to draw strong interest, particularly from retail investors.
Smaller stocks, meanwhile, have posted more modest gains. Kenya Airways and Uchumi Supermarkets rose by 36.8 percent and 23.3 percent, respectively, in January, but their limited size meant they had little effect on overall market value.
Looking ahead, investors are turning their focus to company earnings, especially in the banking sector, where full-year results for 2025 are expected in the coming weeks. Dividend announcements will be closely watched, as higher payouts could provide another boost to share prices.
Written by Bashir Wako
