Foreign investors remained net sellers at the Nairobi Securities Exchange for the sixth consecutive year in 2025, prioritizing liquidity and capital preservation over local market returns.
- •This persisted even as Kenyan equities posted back-to-back strong years in 2024 and 2025, underscoring a growing disconnect between market performance and offshore investor behaviour.
- •Net foreign outflows totalled KSh 11.6Bn in 2025, extending a selling trend that began in 2020. While the scale of exits moderated compared with the heavy drawdowns recorded in 2022–2024, the direction remained unchanged.
- •Foreign investors have now exited the market on a net basis for six straight years, even as the NSE All-Share Index delivered its strongest two-year run since launch.
Monthly flow data shows how this played out. Foreign selling was consistent in the first quarter, eased in the second quarter, then intensified again in the second half of the year. June and August recorded inflows of KSh 820Mn and KSh 1.65Bn, but both were quickly reversed. September alone saw nearly KSh 5.0Bn in net outflows, followed by a further KSh 2.9Bn in November. These two months accounted for the bulk of annual foreign selling, highlighting the absence of sustained re-entry.
The pattern points to tactical positioning rather than renewed long-term interest. Offshore funds sold into rallies to reduce exposure rather than rebuild positions. December’s near-flat outcome reinforced this, suggesting portfolio rebalancing rather than conviction buying.
Participation data confirms a deeper structural shift. Before 2019, foreign investors routinely accounted for more than 60% of monthly NSE turnover, with several periods above 75%. That dominance has steadily eroded. Since 2022, foreign participation has trended lower and more volatile, frequently falling below 45%. In September 2025, foreign participation dropped to 28.0%, among the lowest readings since 2010.
At the same time, domestic investors have emerged as the market’s anchor. Pension funds, insurers, asset managers, and retail investors increased equity exposure as interest rates peaked and then eased. Local capital absorbed foreign supply, particularly in large-cap banks and high-dividend stocks, preventing sharp price dislocations that would previously have accompanied sustained foreign exits.
Global allocation dynamics help explain why foreigners remain cautious. Frontier markets continue to face headwinds from liquidity constraints, benchmark exclusions, currency risk, and competition from high-yielding developed-market assets. For many offshore funds, Kenya has increasingly served as a source of liquidity rather than a destination for long-term capital.
