The Nairobi Securities Exchange (NSE) has added more than Ksh1 trillion in market capitalisation over the past eight months, buoyed by a strong rally in equities even as interest in government bonds wanes.
Latest data from the bourse shows total market value has climbed to Ksh2.5 trillion, up from Ksh1.45 trillion at the end of last year, driven by heavy buying in blue-chip counters such as Safaricom, Equity Group, KCB and EABL.
Analysts attribute the surge to renewed foreign inflows, attractive valuations, a stabilising shilling and softer inflation outlook, which have combined to restore investor confidence after a prolonged bear cycle in 2022–2023.
The equities rally comes at a time when the bond market has seen declining activity, with turnover in secondary trading falling by nearly 25 percent in recent months as investors rotate funds into higher-yielding stocks.
Demand for Treasury bonds had surged last year when yields topped 18 percent, but easing inflation and expectations of a future monetary policy shift have seen appetite cool.
Central Bank data indicates total bond turnover slipped from Ksh79.3 billionin May to Ksh54.9 billion in June, signalling reduced interest in long-dated papers.
Market strategists say the rotation reflects a shift in sentiment from defensive fixed-income assets to growth-oriented equities. Foreign investor participation at the NSE has climbed above 50 percent for the first time in nearly two years, with improved liquidity and stable macroeconomic indicators luring back offshore funds.
Safaricom’s share price has rallied more than 35 percent year-to-date, while bank stocks have seen double-digit gains on the back of record profits and robust dividend expectations.
The NSE All Share Index has risen almost 30 percent since January, positioning Nairobi as one of Africa’s best-performing stock markets in 2025.
Nonetheless, analysts warn that sustainability of the rally will depend on corporate earnings and broader economic stability, including continued support for the shilling and gradual easing of interest rates.
Bond dealers expect that once yields begin to drop significantly, some investors may rotate back into fixed income. For now, surging share prices have delivered a welcome windfall to the bourse, reversing years of punishing losses and restoring optimism among local and international investors alike.
Written By Ian Maleve
