The Kenyan equities market extended its upward momentum in the week ending 6th February 2026, supported by renewed investor interest in large-cap stocks and continued sector rotation into banking and telecommunications counters. Despite a return to net foreign selling, local demand remained resilient, driving broad-based index gains.

Market Performance

The equities market recorded a strong performance during the week, with:

• NASI gaining 3.8%
• NSE 10 rising 2.3%
• NSE 25 increasing 2.2%
• NSE 20 advancing 1.5%

This brings year-to-date (YTD) performance to:

• NASI: +8.2%
• NSE 20: +6.6%
• NSE 25: +6.3%
• NSE 10: +6.0%

The rally was largely driven by gains in large-cap stocks, notably:

• Safaricom (+8.1%)
• BAT Kenya (+5.6%)
• DTB-K (+5.0%)

However, the performance was partially weighed down by declines in:

• EABL (-3.3%)
• NCBA (-0.3%)

The strength of telecom and select banking counters continues to anchor market momentum, reflecting improved investor sentiment amid a stable macroeconomic environment.

Banking Sector Performance

The NSE Banking Sector Index rose 1.6% to close at 218.5, up from 215.0 the previous week.

The performance was driven by:

• DTB-K (+5.0%)
• Cooperative Bank (+4.2%)
• Stanbic (+3.8%)

However, NCBA (-0.3%) moderated the sector’s gains.

The sustained upward movement in banking stocks reflects:

• Improved liquidity conditions
• Lower finance costs amid declining interest rates
• Strengthening balance sheets
• Growing credit demand supported by accommodative monetary policy

Banking counters remain central to the market’s structural recovery.

Market Liquidity and Foreign Participation

Equities turnover increased by 18.8% to USD 36.7 million, up from USD 30.9 million recorded the previous week, bringing total YTD turnover to USD 141.3 million.

Despite the price rally, foreign investors turned net sellers for the first time in two weeks, recording net outflows of USD 8.2 million, compared to net inflows of USD 4.0 million the prior week. This pushes the YTD foreign net selling position to USD 16.6 million, significantly lower than the USD 92.9 million recorded in 2025 over a comparable period.

The divergence between price appreciation and foreign outflows suggests that:

• Local institutional investors remain the dominant drivers of market activity
• Portfolio repositioning rather than structural foreign exit is underway
• Domestic liquidity remains supportive of equity valuations

Weekly Highlight

KPLC H1’2026 Financial Results

Kenya Power & Lighting Company Plc (KPLC) released its H1’2026 financial results for the period ending 31st December 2025, recording a 4.3% increase in Profit After Tax (PAT) to Kshs 10.4 billion, up from Kshs 10.0 billion in H1’2025.

Key Financial Highlights

Revenue Growth

• Total revenue rose 6.9% to Kshs 114.9 billion, supported by:
  • Higher electricity sales volumes
  • Increased demand
  • Improved distribution efficiency

Gross Profit

• Gross profit increased 5.9% to Kshs 38.2 billion

Cost of Sales

• Increased 7.5% to Kshs 76.7 billion, reflecting higher power purchase costs

Operating Expenses

• Rose 6.0% to Kshs 25.2 billion, driven by:
  • Higher provisions for expected credit losses
  • Increased depreciation from capitalized projects
  • Staff-related cost movements

Finance Costs

• Net finance costs declined 25.0% to Kshs 1.5 billion, supported by:
  • Scheduled loan repayments
  • Reduced debt levels
  • A relatively stable currency environment

Earnings Per Share (EPS)

• Increased 4.3% to Kshs 5.3

Balance Sheet Position

KPLC’s balance sheet strengthened:

• Total assets increased 2.1% to Kshs 397.0 billion
• Total liabilities declined 0.3% to Kshs 278.8 billion
• Non-current liabilities reduced by 0.8%, indicating gradual deleveraging

The improvement reflects a stronger financial position and disciplined debt management.

Dividend Announcement

The Board recommended an interim dividend of Kshs 0.30 per share for the year ended 31st December 2025.

This translates to:

• Dividend payout ratio: 5.6%
• Annualized dividend yield: 7.2%

The dividend signals management confidence in cash flow sustainability despite ongoing sector reforms and operational challenges.

Strategic Outlook for KPLC

Going forward, Kenya Power aims to:

• Safeguard supply adequacy amid rising demand
• Accelerate loss reduction programs
• Modernize and digitize grid infrastructure
• Enhance operational efficiency and customer experience

The stable macroeconomic environment — characterized by easing inflation, a steady exchange rate, and lower interest rates — provides a supportive backdrop for sustained performance.

Market Outlook

The continued strength in NASI and banking counters signals growing investor confidence supported by:

• Stable inflation within CBK target range
• Easing domestic yields
• Improved corporate earnings
• Gradual improvement in liquidity conditions

However, foreign investor positioning remains a key variable to monitor. Sustained inflows will be necessary to maintain higher turnover levels and support further valuation expansion.

At current levels, the market reflects improving macro stability but remains sensitive to:

• Earnings season developments
• Monetary policy direction
• Global capital flow dynamics

Overall, the Kenyan equities market enters February with positive momentum, supported by resilient large-cap performance and strengthening sector fundamentals.