Kenya Equities Market Update | 16 January 2026

Overview

The Kenyan equities market recorded a moderate recovery during the week, with all major indices closing higher despite subdued trading activity and renewed foreign selling pressure. Gains were primarily supported by selective accumulation in large-cap banking and telecom stocks, while losses in consumer counters capped broader upside.

Although domestic sentiment remained constructive, declining turnover and a sharp reversal in foreign flows highlighted continued caution among offshore investors, reflecting profit-taking behavior early in the year and sensitivity to valuation and liquidity conditions.

Market Performance

During the week, the equities market was on an upward trajectory, with:

• NASI gaining 1.0%
• NSE 20 and NSE 25 each gaining 0.7%
• NSE 10 rising 0.6%

This took year-to-date performance to gains of:

• 3.7% (NSE 20)
• 3.5% (NASI)
• 3.1% (NSE 25)
• 3.0% (NSE 10)

Market gains were largely driven by selective strength in large-cap stocks, particularly:

• Co-operative Bank of Kenya (+3.9%)
• Safaricom PLC (+2.1%)
• Diamond Trust Bank Kenya (+1.3%)

However, performance was partly offset by losses recorded by:

• East African Breweries PLC (-2.2%)
• Equity Group Holdings (-0.7%)

The mixed stock-level performance underscores a rotation-driven market, with investors favoring fundamentally resilient banking and telecom names while trimming exposure to consumer-facing counters.

Banking Sector Performance

The banking sector index advanced by 0.9% to close at 213.6, up from 211.7 the previous week.

The gains were primarily supported by:

• Co-operative Bank of Kenya (+3.9%)
• Diamond Trust Bank Kenya (+1.3%)
• Standard Chartered Bank Kenya (+1.1%)

These gains were partly offset by weakness in Equity Group Holdings (-0.7%).

Overall, the sector’s performance reflects continued investor confidence in banking earnings resilience, supported by easing interest rates, improving asset quality trends, and stable macroeconomic conditions. However, dispersion within the sector suggests investors remain selective, favoring banks with stronger balance sheets and capital buffers.

Market Turnover and Foreign Investor Activity

Trading activity softened during the week, with equities turnover declining by 19.3% to USD 21.8 mn, from USD 27.1 mn recorded the previous week. As a result, year-to-date turnover rose to USD 49.7 mn, indicating still-modest liquidity at the start of the year.

Foreign investor activity reversed course, with offshore investors becoming net sellers for the first time in three weeks, recording a net selling position of USD 8.6 mn, compared to a net buying position of USD 0.5 mn the previous week.

Consequently, the year-to-date foreign net selling position widened to USD 8.1 mn, though this remains significantly lower than the USD 92.9 mn net outflows recorded in 2025.

The sharp swing in foreign flows suggests:

• Short-term profit-taking following early-year gains
• Sensitivity to global risk sentiment and emerging market positioning
• Continued preference for liquidity and defensive positioning

Outlook

Looking ahead, the equities market is expected to remain range-bound in the near term, with performance driven by:

• Corporate earnings expectations
• Domestic liquidity conditions
• Direction of foreign investor flows

While the macroeconomic backdrop remains broadly supportive, low market liquidity and episodic foreign outflows are likely to cap upside momentum. As a result, the market is expected to continue exhibiting stock-specific performance, favoring fundamentally strong large-cap names with resilient earnings and attractive valuations.