NSE investors gain Sh138bn in January on blue chips rally

Double-digit gains on the stocks of Safaricom, Co-operative Bank of Kenya, Absa Bank Kenya and NCBA Group, which collectively added Sh100.8 billion in market value, drove the Nairobi bourse.

Last year’s record gains rode on the back of increased demand for equities as returns from other assets such as government securities declined in line with falling interest rates.

Annual interest returns on the reopened 20 and 25-year Treasury bonds sold in January stood at 12.87 percent and 14.18 percent, respectively, while Treasury bills rates held at the 7.7 percent to 9.2 percent—with equities offering nearly half of these returns just one month into the year.

The reallocation of capital into equities in the wake of superior annualised returns is set to persist, given expectations that the Central Bank of Kenya (CBK) will cut rates further in the near term.

“At the start of this year, focus has turned to the larger companies due to the increased noise about corporate transactions, with investors now going beyond speculation to seek fundamentally strong companies as the gains in the market normalise,” said Melodie Ndanu, a research analyst at Standard Investment Bank.

“We also expect investors to maintain the bullish outlook with the expectation of new listings, including government parastatals, and increased retail investor activity amid NSE efforts to democratise access to the market through initiatives like fractional trading.”

Local investors have also increased their activity at the NSE as they eye a piece of the capital gain billions.

They returned to the market after years of limited activity, in time to provide demand to meet supply from foreigners who made net sales worth Sh1.08 billion from the bourse last month.

Local investors’ activity is set to deepen further on the back of the NSE’s first large initial public offering (IPO) in nearly two decades with the ongoing Sh106.3 billion sale of a 65 percent government stake in Kenya Pipeline Company.

In the first month of 2025, small cap stocks had dominated the top gainers list in the market, led by TransCentury and its subsidiary East Africa Cables at 246.2 percent and 128.7 percent respectively, and Home Afrika at 86.5 percent. TransCentury and EA Cables have since then been suspended from trading after going into receivership and administration.

Others with large percentage gains were Flame Tree Group at 77 percent, Uchumi Supermarkets at 64.5 percent and Kenya Power at 57.2 percent.

These smaller stocks, however, had limited impact on the overall market valuation, meaning that the NSE added 2.3 percent or Sh44 billion in January 2025 to Sh1.983 trillion, despite having multiple stocks with share price gains above 50 percent.

Read: NSE bank investors add Sh56bn gains in three weeks

This year, the smaller counters have opened with more muted growth numbers, with Kenya Airways and Uchumi the only standouts with gains of 36.8 percent and 23.3 percent to Sh4.83 and Sh1.27 per share respectively.

Instead, it is the larger stocks that have been grabbing the headlines at the bourse, having come into the year on the back of a flurry of corporate actions.

Safaricom added a market cap of Sh50 billion or 4.4 percent in January to Sh1.135 trillion, followed by Co-op Bank at Sh19 billion or 13.6 percent to Sh140.5 billion. Absa and NCBA gained Sh17.7 billion and Sh14 billion respectively, to close the month with valuations of Sh134.15 billion and Sh138.39 billion.

The telecoms operator and NCBA are currently subjects of proposed equity acquisitions by South African firms Vodacom Group and Nedbank Group.

EABL has also seen its majority British owner Diageo Plc enter into an agreement to sell its 65 percent stake to Japanese beverage maker Asahi Holdings, with these transactions expected to close in the course of this year.

The Treasury is meanwhile looking to sell a 15 percent stake in Safaricom to Vodacom for Sh204.3 billion.

For EABL and NCBA, the announcements of the respective offers resulted in spikes in share price given the higher valuations attached to the companies’ equity by the buyers, even as Asahi warned that the EABL purchase price of Sh590 per share was negotiated and should not be compared to the prevailing market price of the brewer’s shares at the NSE.

Going into February, attention turns to banks’ announcements of their full year financials for 2025, where investors will be watching keenly to see if the lenders raise their dividends, which could trigger a new round of share price gains.

On Friday, EABL announced its financial results for the half year to December 2025, with net profit growing 37.6 percent to Sh11.16 billion.

The brewer increased its interim dividend by 60 percent to Sh4 per share from Sh2.50 in the corresponding period in 2024, with its share price appreciating by 5.4 percent or Sh13.25 on Friday to Sh258.50.

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