Market Performance

The Kenyan equities market recorded a strong upward trajectory during the week, with broad-based gains across major indices.

• NSE 20 gained 8.5%
• NSE 25 gained 7.6%
• NSE 10 gained 7.5%
• NASI gained 6.9%

This performance lifted year-to-date (YTD) returns to:

• NSE 20: +15.7%
• NASI: +15.7%
• NSE 25: +14.4%
• NSE 10: +14.0%

The rally was primarily driven by strong performance in large-cap banking stocks:

• DTB-K: +18.1%
• Stanbic: +16.8%
• Equity Group: +12.9%

However, gains were partially offset by declines in:

• NCBA: -2.7%
• BAT: -0.4%

The sharp rally in banking stocks signals renewed investor confidence in earnings recovery, credit growth acceleration, and improving macroeconomic conditions supported by monetary easing and contained inflation.

Banking Sector Performance

The Banking Sector Index surged 8.5% to 237.1, up from 218.5 the previous week.

The gains were anchored by:

• DTB-K (+18.1%)
• Stanbic (+16.8%)
• Equity (+12.9%)

Despite NCBA’s 2.7% decline, sector momentum remains robust. The performance reflects improved credit growth, declining funding costs, and strengthening asset quality as non-performing loans moderate.

The banking sector continues to act as the primary catalyst of index performance in early 2026.

Market Activity & Foreign Participation

Equities turnover rose sharply by 54.9% to USD 56.9 million, up from USD 36.7 million the previous week.

Year-to-date turnover now stands at USD 198.2 million.

Foreign investors remained net sellers for the second consecutive week, recording net outflows of USD 4.6 million, compared to USD 8.2 million the previous week.

YTD foreign net outflows stand at USD 21.2 million, significantly lower than the USD 92.9 million recorded in 2025.

The surge in volumes despite foreign net selling suggests increasing domestic institutional participation and retail re-engagement in the equity market.

Weekly Corporate Highlight

Kenya Electricity Generating Company (KenGen) H1’2026 Results

KenGen released its H1’2026 financial results for the period ended 31st December 2025.

Financial Performance Overview

• Profit After Tax: Kshs 4.2 bn (-20.2% YoY)
• Net Revenue: Kshs 24.8 bn (+6.2% YoY)
• Topline Revenue: Kshs 30.1 bn (+9.4% YoY)
• Operating Profit: Kshs 7.1 bn (+6.4% YoY)
• Finance Costs: Kshs 1.0 bn (-11.0% YoY)
• EPS: Kshs 0.6 (-19.9% YoY)

The decline in profitability was largely attributable to:

• 7.4% increase in operating expenses
• Higher depreciation from asset capitalization
• 27.4% rise in fuel and water costs
• Increased plant operating and steam expenses

Despite the earnings contraction, operational fundamentals improved:

• Operating profit expanded
• Forex and financial asset gains increased by 97.2%
• Finance costs declined due to debt management

The balance sheet remained stable:

• Total assets slightly declined to Kshs 505.3 bn
• Current assets improved
• Current liabilities rose 35.8%

The Board did not recommend an interim dividend, consistent with the prior period.

Strategic Outlook: G2G 2034 Pipeline

KenGen continues to accelerate its G2G 2034 Strategy, targeting capacity expansion and grid stabilization.

Key projects include:

• 63 MW Olkaria I Rehabilitation
• 80 MW Olkaria VII Project
• 42.5 MW Seven Forks Solar Project
• 58.4 MW wellhead generation leasing
• Gogo Hydropower upgrade (2 MW → 8.6 MW)
• 200 MW Battery Energy Storage System (BESS)
• Raising of Masinga Dam

These projects position KenGen for long-term earnings growth through capacity expansion, diversification, and improved operational efficiency.

While short-term profitability is pressured by cost dynamics, the company’s strategic investments provide structural support for medium-term performance.

Market Outlook

The strong rally in equities reflects:

• Sustained banking sector momentum
• Improving macroeconomic stability
• Moderating inflation
• Continued monetary easing
• Increased domestic liquidity

However, foreign investor caution remains visible, suggesting that global risk appetite and capital flow dynamics will continue influencing near-term volatility.

Going forward, market direction will likely depend on:

• Corporate earnings trajectory
• Banking sector asset quality trends
• Liquidity conditions
• Foreign investor re-entry patterns

The early 2026 performance suggests growing domestic confidence, with banking stocks remaining the key performance anchor.