The Nairobi Securities Exchange (NSE) has sustained its market rally, which has seen investors’ portfolios grow by KSh 137 billion in 2 months, was propelled by strong gains in key sectors including investment, insurance, energy, commercial services, investment services and construction.
- •Investor wealth, as shown by the Market Cap, increased by 7.1% to KSh 2.1 trillion at the end of February, from KSh 1.9 trillion at the beginning of the year, driven by speculative trading ahead of the earnings season.
- •The market was bullish, 48 stocks advancing and 9 stocks declining, with with the NSE All Share Index (NASI) gaining 7.0% in the 2 months to 132.13 points in February.
- •The substantial growth in the overall market cap saw the benchmark index – NSE 20 Share Index – rise by 14.4% in the same period to 2300.17.
This comes as the NSE Chief Executive Officer, Frank Mwiti unveiled an ambitious strategy seeking to attract 9 million active retail investors, both domestically and in the diaspora as part of a broader effort to revitalize the stock market and boost participation.
“We want to mobilize retail investors back into the market, both domestic and diaspora. Our target is 9 million active,” Mwiti said recently.
The rally is also likely to be fueled by the March earnings season where investors often load up on positions ahead of book closures in order to secure short-term dividends from their investments
The Central Bank of Kenya’s decision to lower its benchmark interest rate from 13% to 11.25% has also helped lure investors back to the equities market for attractive returns.
The stable shilling coupled with improved earnings boosted investor confidence and led to higher stock prices in 2024 spilling over to 2025. However, foreign institutional investors are yet to reverse their selling strategy, maintaining a net selling position in January and February.
Penny Stocks are Outperforming the Large Caps
Foreign investors remained net sellers, recording a year to date selling position of KSh 2.2 billion, marginally lower than the KSh 2.3 billion record in the same period in 2023.
The investment sector saw the highest returns in capital gains with a 51.3% median gain year-to-date, propelled by massive gains from Trans-Century and Home Afrika. The banking sector was resilient, with only I&M Group recording a mild decline of 0.8%.
The agricultural sector saw the least gains, with most companies in the sector recording capital losses following weak financial performance affected by supply chain disruptions. Similarly, the manufacturing sector recorded mild gains as stocks including Africa Mega Agricorp, Carbacid and BOC Kenya weighed on gains by counters in the same industry.
Among the top gainers, small-cap and medium-cap counters outperformed the large-caps, with Trans-Century, Home Afrika and East African Cables leading the pack with a 232.5%, 142.9% and 18.5% respectively.
Top losers included Africa Mega Agricorp (-52.1%), Limuru Tea (-17.8%), Crown Paints Kenya (-11.4%) and Bamburi Cement (-10%).
