Kenya Equities Weekly Market Report | Week Ending 16th October 2026

Kenya’s equities market recorded a broad-based decline during the week, with all major benchmark indices closing in negative territory. The downturn was primarily driven by losses in large-cap stocks, particularly within the banking and telecommunications sectors, alongside renewed foreign investor selling pressure.

Despite the weekly correction, the market maintained strong year-to-date gains, reflecting the sustained positive performance recorded throughout 2026. Meanwhile, trading activity increased significantly, suggesting continued investor participation despite the prevailing market weakness.

A key corporate development during the week was the release of Kenya Pipeline Company’s FY’2026 financial results, which highlighted improved profitability, balance sheet expansion and a proposed dividend payout.

1. Equities Market Performance

The Kenyan equities market reversed its recent gains during the week, with all four major indices recording declines.

The NSE 10 registered the largest decline at 2.1%, followed by the NSE 25, NASI and NSE 20, which declined by 1.9%, 1.8% and 1.5%, respectively.

Despite the weekly losses, all benchmark indices remained firmly positive on a year-to-date basis, with the NSE 10 leading at 35.6%, followed by the NSE 25 at 35.3%, NASI at 33.4%, and NSE 20 at 28.4%.

The market’s negative performance was largely attributable to price declines in key large-cap counters, including Equity Group, NCBA and Safaricom, which lost 3.8%, 3.1% and 2.4%, respectively.

The downward movement was partly moderated by marginal gains in BAT and Stanbic, which appreciated by 0.2% and 0.1%, respectively.

Our Perspective: The broad-based decline reflects a period of market consolidation following substantial gains recorded earlier in the year. With the NSE 10 and NSE 25 maintaining year-to-date gains exceeding 35.0%, some investors may be reassessing valuations and taking profits. However, the extent to which the correction reflects profit-taking rather than a broader change in sentiment will depend on subsequent market performance and capital flows.

2. Banking Sector Performance

The banking sector recorded a decline during the week, with the banking sector index falling by 1.9% to 282.9, from 288.3 recorded the previous week.

The decline was primarily driven by losses in several major banking counters, including Equity Group, which declined by 3.8%, NCBA Group by 3.1%, and Diamond Trust Bank by 2.2%.

However, the sector received marginal support from Stanbic, which gained 0.1%.

The decline in banking stocks contributed significantly to the broader market weakness, given the sector’s substantial representation in the NSE’s major indices.

Our Perspective: Banking stocks remain an important driver of the Kenyan equities market. While the week’s decline suggests some near-term investor caution, the sector’s medium-term performance will continue to be influenced by profitability, asset quality, private sector credit growth, dividend expectations and the prevailing interest rate environment.

With the Central Bank maintaining its policy rate at 8.75%, investors are likely to pay particular attention to the implications of stable lending rates and funding costs on bank margins and earnings growth.

3. Market Turnover and Trading Activity

Trading activity increased significantly during the week, despite the decline in market indices.

Equities turnover rose by 63.0% to USD 24.5 mn, compared to USD 15.0 mn recorded the previous week.

This brought cumulative year-to-date turnover to USD 3,092.6 mn, highlighting the substantial trading activity recorded in Kenya’s equities market throughout 2026.

The increase in turnover amid declining share prices suggests heightened market activity as investors adjusted their positions.

However, higher trading volumes during a declining market do not necessarily indicate stronger investor confidence. They may also reflect increased selling pressure, portfolio rebalancing or profit-taking following an extended period of market gains.

Our Perspective: The increase in market turnover indicates that investor participation remains active despite the week’s correction. Going forward, the sustainability of market liquidity and the direction of institutional and foreign investor flows will be important indicators of market sentiment.

4. Foreign Investor Activity

Foreign investor sentiment weakened during the week, with foreign investors reverting to a net selling position.

Foreign investors recorded net outflows of USD 9.5 mn, compared to net inflows of USD 5.7 mn recorded the previous week.

Consequently, cumulative year-to-date foreign net selling increased to USD 181.3 mn, compared to net selling of USD 92.9 mn recorded in 2025.

The reversal in foreign investor flows coincided with the decline in major market indices, suggesting that foreign selling may have contributed to the downward pressure on large-cap stocks.

Notably, cumulative foreign net outflows in 2026 have already exceeded the USD 92.9 mn recorded for 2025, highlighting persistent foreign portfolio outflows despite strong domestic equity market performance.

Our Perspective: Sustained foreign investor selling remains a key consideration for the Kenyan equities market. Although strong domestic investor participation may help absorb selling pressure, continued foreign outflows could weigh on market liquidity and valuations, particularly for large-cap stocks.

The direction of foreign flows will remain sensitive to global risk appetite, exchange rate stability, domestic corporate earnings and broader macroeconomic conditions.

5. Weekly Highlight – Kenya Pipeline Company FY’2026 Financial Results

During the week, Kenya Pipeline Company (KPC) released its FY’2026 financial results, reporting improved profitability, revenue growth and a stronger balance sheet.

The company recorded a 13.1% increase in Profit After Tax to Kshs 11.6 bn, compared to Kshs 10.2 bn in FY’2025.

The improvement was primarily supported by higher revenue from pipeline transportation operations, although increased operating expenses and depreciation charges partly moderated profitability growth.

Revenue Performance

KPC’s net revenue increased by 8.9% to Kshs 33.8 bn from Kshs 31.1 bn recorded in FY’2025.

The improvement was largely supported by an 8.4% increase in transport revenue to Kshs 41.8 bn from Kshs 38.6 bn, reflecting improved performance in the company’s core pipeline transportation business.

The growth in revenue underscores the strategic importance of KPC’s infrastructure in supporting petroleum distribution across Kenya and the wider East African region.

Operating Expenses and Profitability

Operating expenses increased by 4.1% to Kshs 8.9 bn from Kshs 8.5 bn, while direct costs rose by 8.5% to Kshs 9.2 bn from Kshs 8.4 bn.

Additionally, depreciation and amortization charges increased by 20.2% to Kshs 7.7 bn from Kshs 6.4 bn recorded in FY’2025.

Despite the increase in operating costs, the company recorded improved profitability, supported by stronger revenue performance.

The increase in depreciation charges may reflect the financial impact of the company’s substantial infrastructure asset base and related capital investments, although further disclosures would be required to establish the precise drivers.

Balance Sheet Performance

KPC’s total assets increased by 6.1% to Kshs 149.3 bn from Kshs 140.6 bn recorded in FY’2025.

The expansion was primarily supported by a 31.2% increase in current assets to Kshs 30.0 bn, alongside a marginal increase in non-current assets to Kshs 119.2 bn.

Meanwhile, total liabilities declined by 8.5% to Kshs 29.9 bn from Kshs 32.7 bn.

The combination of asset growth and declining liabilities indicates an improvement in the company’s overall balance sheet position.

Dividend Announcement

The Board of Directors recommended a first and final dividend of Kshs 0.32 per share, representing a reported dividend yield of 6.6% and a dividend payout ratio of 50.9%.

The proposed dividend highlights the company’s commitment to shareholder returns following its transition into a publicly listed company.

For income-oriented investors, the dividend represents an additional consideration alongside the company’s earnings performance, capital expenditure requirements and long-term growth prospects.

KPC Outlook

Following its privatization and transition into a listed public company, KPC is expected to focus on strengthening corporate governance, improving operational efficiency and enhancing shareholder value.

The company’s strategic priorities include continued investment in pipeline safety, infrastructure capacity, storage facilities and regional petroleum transportation networks.

Our Perspective: KPC’s FY’2026 financial performance reflects improving operational and financial fundamentals, supported by revenue growth, stronger profitability and a healthier balance sheet.

Its strategic position in petroleum transportation infrastructure provides an important foundation for long-term operations. However, investors should continue to monitor operating costs, capital expenditure requirements, regulatory developments and the sustainability of dividend distributions.

6. Equities Market Outlook

Kenya’s equities market continues to demonstrate strong year-to-date performance despite the correction recorded during the week.

The decline across all benchmark indices, coupled with renewed foreign investor selling, suggests that the market may experience increased short-term volatility as investors reassess valuations following substantial gains earlier in the year.

Nevertheless, several factors could continue to support the market’s medium-term outlook, including resilient corporate earnings, improving economic activity and continued domestic investor participation.

Kenya’s GDP growth of 5.1% in Q2’2026 provides a relatively supportive macroeconomic backdrop. However, elevated inflation, higher fuel prices and persistent foreign portfolio outflows remain important downside risks.

Going forward, we expect investor attention to remain focused on corporate earnings announcements, dividend prospects, foreign investor flows and the direction of domestic interest rates.

Our Outlook: We maintain a cautiously positive medium-term outlook for Kenya’s equities market, although near-term volatility is likely to persist. Investors may increasingly favor fundamentally strong companies with sustainable earnings, healthy balance sheets, consistent dividend policies and reasonable valuations.

The recent market correction reinforces the importance of disciplined portfolio diversification and selective investment strategies rather than relying solely on broad market momentum.