The Nairobi Securities Exchange (NSE) closed March with every major index down between 8.5% and 10.5%, only 7 of 69 listed stocks gaining, and foreign investors selling KSh 4.28Billion net.
- •A market that entered March having just crossed KSh 3.5Trillion in capitalization exited the month at KSh 3.23Trillion.
- •The NASI fell 9.84% to 194.82, while the NSE 10 posted the heaviest decline at 10.49%, reflecting the outsized damage to large-cap stocks that dominate the index.
- •The US-Israel strikes on Iran from February 28 and Iran's subsequent closure of the Strait of Hormuz from March 4 pushed Brent crude 47% above pre-war levels, with prices trading above $106 per barrel during the final full week of the month.
Snapshot
The month split into two phases with the first two weeks saw the KPC and ALP REIT listings, continued momentum from February's record rally, and market cap briefly above KSh 3.5Trillion.
The last two weeks produced the worst weekly decline since the pandemic (Week 13, KSh 231.17Bn lost in five straight sessions) and continued selling into the final two trading days.
The Banking Index lost 8.89% despite strong earnings and improved dividends reported, the NSE 25 declined 8.94%, and the NSE 20 shed 8.50%, its worst month since August 2016.
Market capitalization fell KSh 179.31Billion, ranking March as the 9th worst month by value destruction since 2008. That figure understates the damage: the KPC listing injected approximately KSh 164Billion in fresh capitalization in early March, meaning existing shareholders lost closer to KSh 343Billion in underlying value.
The selloff was concentrated in large caps and financials.
- •Safaricom fell 14.06% for the month, shedding an estimated KSh 180Bn in market value, more than the headline market cap loss of KSh 179Bn because the KPC listing offset other declines.
- •KCB lost 15.58%, Equity dropped 10.68%, ABSA fell 11.34%, and Standard Chartered declined 8.83%.
- •Among non-banks, Kenya Power lost 13.24%, Kenya Airways shed 12.32%, and Kenya Re fell 19.95%.
- •The seven stocks that gained (led by Africa Mega Agricorp at +20.46% and Eveready at +7.08%) were all micro-caps or cross-listed counters with negligible liquidity.
Foreign investors sold in 17 of 22 trading sessions with net outflows totalling KSh 4.28Billion, with foreign sales of KSh 8.61Billion against purchases of KSh 4.34Billion. The heaviest selling came in Week 11 (KSh 2.60Billion in outflows), coinciding with the immediate aftermath of the Hormuz closure. The five positive days clustered around two windows: three fell in the first week before the war fully hit markets, and two came in the final week when brief ceasefire speculation pulled oil below $100 before Iran's rejection reversed the optimism.
Equity turnover fell 21.6% month-on-month to KSh 19.58Bn from KSh 24.97Bn in February, despite the massive volume surge in the final week. February's higher base was driven by the Ziidi Trader launch and the record Week 7 rally. Bond turnover declined 13.7% to KSh 329.46Bn.
EPRA held pump prices unchanged through March, but the shield is temporary. Current pricing is based on February cargoes predating the war. The cost of Murban crude imported by Kenya jumped 21% in a single week in early March, and the April 15 EPRA review will be the first to capture war-era pricing. Higher fuel costs threaten to push inflation above the 4.3% recorded in February and potentially stall the CBK's rate-cutting cycle.
The correction has not erased the broader re-rating. The trailing twelve-month market cap gain remains above KSh 1.1Trillion, and only three of the last twelve months have been red. Banks are in the middle of a record earnings season reporting record profits and multiple lenders declaring significantly higher dividends.
The selloff has also compressed valuations sharply: the market closed March at 4.5x earnings, down from 6.3x in mid-February, with the banking sector at a median 5.4x and yielding 8.3%. Five banks trade below 5x earnings with dividend yields above 7% and return on equity above 18%. These are just crisis-level multiples on the most profitable banking sector in East African history.
