The market value of the Nairobi Securities Exchange (NSE) closed above Sh3 trillion for the first time in the wake of a remarkable rally that began last year and was then turbocharged by Safaricom’s profit announcement on Thursday.
The value of all stocks at the Nairobi bourse rose to Sh3.044 trillion at the close of trading yesterday, up from Sh2.991 trillion on Wednesday.
Analysts say the 2025 market rally has ridden on the back of lower returns on fixed income assets, including Treasury bills and bonds.
This has pushed investors to pour cash into shares, with the NSE posting a return of 56.9 percent since the start of the year and increasing equity owners' paper wealth by Sh1.1 trillion.
The return beats other asset classes like bonds, real estate and fixed bank deposits.
On Thursday, Safaricom and KCB helped lift the market above the Sh3 trillion mark after threatening for days to hit the milestone.
Safaricom’s value grew Sh16 billion on Thursday to Sh1.213 trillion after its stock rose to Sh30.30 from Sh29.90 from Wednesday’s close on the day it reported a 52 percent jump in half-year profits.
Safaricom’s net income rose to Sh42.7 billion in the six months through September from Sh28.1 billion a year earlier after narrowing losses in its Ethiopian operations and double-digit growth in M-Pesa revenues.
KCB’s share price rose from Sh63.25 to Sh69 on Thursday, adding Sh18.5 billion to the market.
Gains in blue chips, including Safaricom, Equity and KCB, are behind the surge in the market valuation.
Small caps like Sameer Africa, Home Afrika and NSE have chalked gains of 515 percent, 205 percent and 236 percent, respectively.
“It has to do with investors turning on risk as interest rates come down. As the returns from fixed income fall, investors seeking higher returns have had to re-profile their portfolios towards equities,” said Wesley Manambo, a Senior Research Analyst at Standard Investment Bank (SIB), in an earlier interview.
Investors have taken advantage of long periods of market undervaluation to pile into stocks on the expectation of a recovery and higher gains.
Corporate earnings are expected to sustain the momentum of stocks into the end of the year and early 2026 in what could favour blue chip counters that are largely preferred by foreign and local institutional investors because of their profits and dividends track record.
Banks are expected to continue growing their profitability on the back of cost containment measures as they find efficiency in digital investments and lower their loan-loss provision costs.
“For as long as there is liquidity in the market, the demand for stocks will always outstrip supply, sending share prices higher,” Mr Manambo added.
The return of foreign investors who have remained net sellers for most of the year could also fuel the extension of the rally.
Of the Sh1.1 trillion gain, the top five counters—Safaricom, Equity, KCB, East Africa Breweries Limited (EABL) and NCBA —accounted for over 72 percent of the gains.
This reflects the outsized influence of the counters, which makes it difficult to gauge the performance of the NSE.
The Capital Markets Authority (CMA) has raised alarm over the dominance of a handful of counters on the market and has been seeking interventions to ease their stranglehold.
