• Kenya's stock market is Africa's top performer since May 2024, driven by strong gains and a stable currency
• The rally is concentrated in a few stocks and sectors, while fixed-income markets remain dominant.
• Future growth hinges on broadening market participation and upcoming privatizations to improve liquidity.

Kenya’s stock market has experienced an exceptional surge since May 2024, delivering Africa’s strongest equity gains in USD-Adjusted returns. The Nairobi Securities Exchange (NSE) has increased investor wealth by more than KSh 1.07 trillion ($8.2 billion) over the past 15 months, raising total market capitalization to KSh 2.68 trillion by late August 2025. This rebound has renewed confidence in local capital markets and has positioned Nairobi as the continent’s top performer in hard-currency terms.

The gains are reflected in the NSE All-Share Index (NASI), which has increased between 24% and 38% year-to-date in 2025, reaching a peak of around 170 points in late August. This marks the most significant rally since 2013, ending a decade of lackluster performance. Renewed domestic demand, selective foreign inflows, and supportive monetary policy have driven the rally. However, beneath the headline figures, the level of participation remains narrow, with only a few stocks generating the majority of the returns.

Sector performance highlights the concentration. The energy sector has dominated, with Kenya Power soaring 139% year-to-date and KenGen climbing 105%. Industrial player Sameer Africa has advanced 84%, while Safaricom, the index heavyweight, is valued at over KSh 1.1 trillion, cementing its dominance. Insurance and investment service stocks have also delivered strong returns. In contrast, agriculture stocks are down 3.6% and automotive shares have fallen 7.7%, underscoring the uneven nature of the rally.

Fixed-income markets continue to overshadow equities. The secondary bond market recorded a turnover of KSh 1.55 trillion by July 2025, surpassing the full-year record set in 2024 in just seven months. The appetite for government debt reflects investors' preference for safer assets, even as equities recover. This imbalance also means that new equity issuance has remained muted. However, July brought the first major IPO in five years, when Shri Krishana Overseas Ltd listed on the NSE. The launch of the Satrix MSCI World Feeder ETF and a KSh 44.9 billion Infrastructure Asset-Backed Security (IABS) added further depth to the product offerings.

Monetary policy has been a strong tailwind. The Central Bank of Kenya (CBK) has lowered its policy rate seven times in 2025, reducing it to 9.50% in August from 12.00% in January. In April, it unexpectedly cut 75 basis points to 10.0%, followed by a move to 9.75% in June, then further easing to 9.50% in August. Inflation stays steady at 4.1% in July, within the CBK’s target range of 2.5%–7.5%, while foreign reserves cover 4.7 to 4.8 months of imports. The current-account deficit has decreased to 1.5% of GDP from 2.2% a year earlier, thanks to resilient exports and consistent remittances.

For equities, lower bond yields have encouraged pension funds and domestic institutions to shift back toward stocks. However, the rally remains top-heavy: the ten largest companies still make up over 70% of NSE market cap, leaving the market vulnerable to concentrated shocks.

Daily equity turnover averages $10–12 million, which is far below Johannesburg’s $1 billion, highlighting Nairobi’s liquidity challenges. Foreign flows are inconsistent. Net outflows decreased to KSh 16.5 billion in 2024 from KSh 52 billion in 2023. Still, custodial data for 2025 is incomplete, and anecdotal reports indicate offshore investors have started taking profits after July’s brief surge.

Looking ahead, the NSE aims to expand participation by allowing retail investors and introducing fractional-share trading platforms. The government has also announced plans to privatize state-owned companies, starting with the Kenya Pipeline Company, through IPOs designed to boost domestic capital formation and lessen dependence on external borrowing.

The rally since May 2024 is promising but delicate. It relies on accommodative monetary policy, a few outperforming sectors, and selective foreign inflows. With limited liquidity and narrow market breadth, any shift in currency stability or earnings growth could cause sharp corrections. For investors, Nairobi provides the best short-term returns on the continent in dollar terms. However, its long-term viability will depend on whether policymakers and the exchange can turn this momentum into a more diverse and resilient market.

Idriss Linge