Kenya Equities Market Update – 19th December 2025

Market Overview

The Kenyan equities market staged a strong rebound during the week, with all major indices posting solid gains amid heightened investor activity and improving sentiment. The rally was primarily driven by East African Breweries Limited (EABL) following Diageo’s announcement of a proposed disposal of its 65.0% stake to Asahi Group Holdings, a transaction that would mark Asahi’s first major entry into the African market.

Market liquidity improved significantly, with equities turnover nearly doubling, while foreign investors turned net buyers for the second consecutive week, signaling a short-term shift in offshore sentiment after prolonged net selling.

Despite ongoing regulatory scrutiny surrounding EABL’s recently issued Medium-Term Note (MTN), the proposed transaction is assessed as a shareholder-level change rather than an operational or balance-sheet disruption, leaving EABL’s fundamentals and debt obligations intact.

Market Performance

• The equities market closed the week firmly higher, with:
  • NSE 10 gaining 5.6%
  • NSE 25 up 5.3%
  • NSE 20 advancing 4.6%
  • NASI rising 3.9%
• Year-to-date (YTD) performance improved further, with all major indices recording gains above 45%, underscoring sustained recovery momentum in 2025.
• Market performance was led by large-cap counters, notably:
  • EABL (+24.1%)
  • NCBA (+12.3%)
  • Co-operative Bank (+6.7%)
• Performance was marginally offset by declines in select counters such as DTB-K (-0.9%).

Market Activity & Foreign Investor Flows

• Equities turnover surged by 87.0% week-on-week to USD 60.2 mn, reflecting increased participation following the corporate action announcement.
• Foreign investors were net buyers for the second consecutive week, posting net inflows of USD 0.9 mn.
• Despite the recent inflows, YTD foreign investor positioning remains net negative at USD 92.6 mn, highlighting that recovery in offshore participation remains tentative.

Weekly Highlight: Diageo–Asahi Transaction (EABL)

🔹 Transaction Snapshot

• Diageo proposes to sell its entire 65.0% stake (514.0 mn shares) in EABL to Asahi Group Holdings, subject to regulatory approvals in Kenya, Uganda, and Tanzania.
• At a market price of Kshs 288.75, the stake is valued at approximately Kshs 148.4 bn, with EABL’s total market capitalization at Kshs 228.3 bn.

🔹 Strategic Implications

• Asahi’s entry represents its first major investment in Africa, potentially bringing global operational expertise and long-term strategic capital.
• Public shareholders will continue to hold 35.0% of EABL post-transaction.

🔹 Regulatory Considerations

• The Capital Markets Authority (CMA) has requested clarification on the timing of EABL’s Kshs 16.8 bn MTN issuance relative to the announcement of Diageo’s exit.
• EABL has maintained that it was not aware of Diageo’s intended exit at the time of the bond issuance, asserting that the MTN program remains an independent financing transaction.

🔹 Market Reaction

• Investor sentiment has been decisively positive, with EABL’s share price rallying 19.3% within days, reaching levels last observed in June 2016.
• The transaction is viewed as non-disruptive operationally, with no impact expected on EABL’s debt servicing capacity or ongoing business performance.

Outlook & Key Takeaways

• The week’s performance highlights the market’s sensitivity to large-cap corporate actions, particularly those involving strategic foreign investors.
• Rising turnover and foreign inflows suggest improving near-term sentiment, though sustained participation will depend on regulatory clarity and macro stability.
• Subject to approvals, Asahi’s entry could provide long-term strategic upside, while near-term volatility may persist as regulatory processes unfold.