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Equities Performance – Full Year 2025
Stocks performed exceptionally well in 2025, to surpass some pre-covid performance levels by posting a triple digit growth, boosted by lowering interest rates, stable inflation and a calm political landscape embraced by local investors. This was further bolstered by global rate cuts even as foreign presence dwindled.
Local stocks’ prices expanded by 51.1% year on year (y-y) on average led by NSE 20 counters which jumped 56.1% from 2,010.65 to 3,139.19 points. The top ten most liquid counters, NSE 10, accelerated 50.9% to 1,965.20 points, while the medium counters in NSE 25 went up by half to 5,096.68 points after hitting an all-time high in Nov-2025.
Faster price upticks were witnessed in Q2-2025 and Q3-3035 with average gains of 17.3% and 15.3%, respectively, supported by a faster interest rate cut transmission that left equities the next investment destination. Q1-2025 and Q4- 2025 recorded growths of 5.9% and 5.6%, respectively.
This saw overall market capitalization expand 51.8% y-y from KES 1,939.94Bn on 31st Dec-2024 to KES 2,944.54Bn, slightly pushed up by the listing of Satrix MSCI World Feeder (an exchange traded fund) and Shri Krishana Overseas that happened in the second half of 2025 (H2-2025).
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Market activity accelerated 30.4% y-y from 4.86Bn to a six-year high of 6.34Bn shares, surpassing the 2018 level. Heavy transactions happened in H2-2025, where 3,316.87Mn shares were transacted in relation to 3,018.64Mn shares exchanged in HY-2025, cementing the impact of the accelerated monetary policy easing by then.
As such, market turnover jumped 37.3% y-y from KES 105.97Bn to KES 145.47Bn with the second half still delivering 61.5% or KES 89,444.37Mn as HY-2025 contributed KES 56,026.59Mn or 38.5% of the year’s value.
Quarter on quarter, Q3-2025 performed best to contribute 28.7% or 1,818.77Mn shares and KES 46,227.67Mn or 31.8% of the entire year’s total turnover, see below:
Foreign participation further shrunk to a new low of 36.9% with a reduced net foreign outflow of KES 11.90Bn in comparison to a 50.0% average foreign activity or KES 16.52Bn net foreign outflow posted in 2024.
Heavy foreign outflows were noted mainly on the telecommunication (KES 5.89Bn), banking (KES 3.93Bn) and the manufacturing (KES 921.45Mn) sectors, as many foreigners cashed in the capital gains.
Safaricom retained the annual top mover after trading KES 46.17Bn from 1.91Bn shares. This was partly sustained by its improved share valuation to KES 36.00 per share on a better HY-2026 results and persistent foreign sale-off views to be geared by global geopolitical tension. Improved valuation and local focus on Safaricom saw its price climb 66.3% y-y from KES 17.05 to 28.35 by end of 2025 but still below our mentioned target value.
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KCB Group took second position with KES 26.48Bn in turnover from 530.48Mn shares, buoyed also by an improved market valuation and payment of a special and interim dividends of KES 4.00 per shares. The Group was also bolstered by better financials reported for Q1-2025, Q2-2025 and Q3-3035 with prospects of a final dividend.
Consequently, KCB Group’s price ballooned 58.1% from KES 41.60 to KES 66.75 to surpass our KES 60.06 per share.
Equity Group came third with KES 19.93Bn from 271.90Mn shares on what remains to be its improved valuation which surpassed KES 72.00% as of Nov-2025 following stellar Q3-2025 financials. The counter witnessed some improved foreign entries, resulting in a net foreign inflow of KES 432.06Mn while its price improved 38.2% to KES 66.75 per share.
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Bonds Performance – Full Year 2025
Primary Bonds Market Performance
Improved liquidity situation saw the year’s primary auctions oversubscribed at 224.1% or KES 1,691.65Bn while the government accepted KES 1,109.32BnBn, representing a 146.9% performance against annual target of KES 755.00Bn.
The amount accepted/borrowed was 27.8% higher in relation to KES 868.18Bn accepted in 2024 against KES 595.00Bn target.
The performance was supported by coupon maturities and payouts totaling to KES 975.71Bn, 26.7% higher from that of KES 770.27Bn paid out in 2024.
The first and second half almost balanced out in performance, H1-2025 delivered 481.10Bn or 49.3% as H2-2025 contributed KES 494.62Bn or 50.7% of the accepted amount.
Quarter on quarter performance saw Q1-2025 contribute the most at KES 304.93Bn or 31.3% of the accepted amount upon re-openings of infrastructure bond papers (IFBs) which wooed heavy subscriptions. IFBs re-openings for August 2025 also attracted massive subscriptions of up to KES 530.89Bn resulting in a 30.1% contribution from Q2-2025.
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Secondary Bonds Market Performance
Secondary bonds valued traded jumped up 75.5% year on year to record a five year high of KES 1.71Tr (KES 2,710.42Bn) up from KES 1,544.38Bn traded in 2025. The surge was occasioned by the ongoing rate cuts that started in August 2024 and picked momentum in the period, thus resulting to improved bond value and necessitating heavy sales.
The rate cuts also saw some investors take positions in the sector to lock in better returns before rates stabilize down and thereby promoting in creation of market demand.
Market activities were relatively balanced between the first and second half of the year. The first quarter and third quarters, however posted some improved activities on impact from the above infrastructure bond reopenings that occurred in the period, resulting in high secondary activities immediately after the auctions.
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Further, the rise in annual turnover benefited from re-investments of the above KES 975.71Bn coupons and maturity payouts that happened in the year.
IFB1/2024/8.5-year issued in Feb-2024 retained the year’s top mover position with KES 198.87Bn while its yield to maturity (YTM) fell 352.8bps from 16.6489% on 31-Dec-2024 to 13.1211%, thus improving its value for capital gains significantly for existing investors.
The FXD1/2022/25 took second mover position after trading KES 192.40Bn while its YTM dropped marginally from 14.1880% to 13,9190% on effect from constant re-openings. FXD1/2022/25 was re-opened six times in 2025 alone, emerging as the most preferred paper for government debt re-structuring.
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Yield Curve
Interest rate cuts saw the yield curve shift downwards all the way from the short-end to the long end.
Increased demand for short-term papers saw the short-end curve widen faster on elevated demand in the sector. This is even as the market remain starved of short-term papers as the government focuses on long-term tenure, a tactic seen to restructure short-term obligations to long-term.
The middle and long-term curve also shifted down at a slower pace impacted by the re-opened papers for Jan-2026, announced in Dec-2025.
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Economic Performance Summary
As of Q2-2025, the local economy posted a 5.0% expansion up from 4.6% in Q2-2024 and 4.9% in Q1-2025, fueled by strong economic activities in Agriculture, construction, mining and finance sectors. Full year 2025 projections point to a growth of 5.2%, backed by expected strong growths in agriculture and the service sectors, plus recoveries in the building & construction and manufacturing sectors.
During the year 2025, the Central Bank monetary policy implemented six rate cuts, cutting a total of 200.0bps from 11.25% in Dec-2024 to 9.00% by Dec-2025, in a bid to boost economic expansions.
Interest rate cuts transmission witnessed a progressive growth in the private sector credit from a contraction of 2.9% in Jan-2025, a growth of 0.3% in Mar-2025, to 2.2% in Jun-2025, to 5.0% in September and 6.3% by end of Nov-2025, driven by increased lending.
The full adoption of the risk-based credit model in lending is expected to offer some reprieve for banks and lending comfortability. The model will be full adopted by March 2026.
Annual average inflation dropped to a low of 4.0% in 2025 from 4.5% in 2024 and 7.7% in 2023, cushioned by a stable exchange rate, low pump prices and increased agricultural productivity backed by a favorable weather.
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Interbank
Interbank rate hovered within the Central Bank Policy guideline by closely tracking changes in the Central Bank Rate.
As a result, the interbank shed 210.8bps from 11.10% on 31-Dec-2024 to 8.99% on 31-Dec-2025, brought down by the above rate cuts. The drop was also assisted by increased market liquidity as the cost credit came down.
Market liquidity improvement saw demand for the same dwindle 50.7% y-y from KES 11.76Bn to KES 5.80Bn and consequently pull-down average demand by almost a half from KES 26.75Bn to KES 13.79Bn.
Bank excess reserves however dropped 62.5% from KES 44.00Bn to KES 16.50Bn, partly reduced by a downward review of the cash reserves ratio from 4.25% to 3.25% in early February 2025 to create more liquidity for lending.
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Treasury Bills
A total of KES 1,699.10Bn was subscribed or 136.1% against the year’s KES 1,248.00Bn with the government accepting KES 1,501.79Bn to represent a 120.3% performance against target. H1-2025, contributed the most at KES 823.20Bn or 54.8% of the borrowed amount as H2-2025 brought in KES 678.58Bn or 45.2% out of the KES 1,501.79Bn accepted.
We attribute better performance in the first half of the year to the sector’s higher returns which dwindled I faster in H2-2025 as rate cuts accelerated.
The performance was supported by reinvestments from the KES 1,370.83Bn that matured in the year. Part of this, KES 691.89Bn matured in H1-2025 and KES 678.94Bn in H2-2025. Q4-2025 and Q2-2025 recorded the most payouts of KES 396.08Bn and KES 369.54Bn, respectively.
Return on investment across the three papers narrowed down with the 182-yr paper dropping faster at 222.2bps from 10.0216% on 31-Dec-2024 to 7.80000% where it has stabilized since late November 2025. The 364-day paper lost 219.9bps from 11.4095% to 9.2109% followed by the 91-day paper at 216.6bps from 9.8946% to 7.7281%.
Faster drops in returns happened in the Q1-2025 as the government effected its rate transmission to T-bills.
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Currency
Th shilling strengthened marginally against the US dollar in 2025 at 0.2% to KES 129.01 per dollar. However, against the British pound, euro and the Japanese yen, the shilling weakened 7.0%, 12.8% and 0.3%, respectively.
The strengthening against the dollar was informed by a general weakening of the US currency which lost 9.4% against a basket of major currencies over growth uncertainties posed by constant policy review and geopolitical tensions.
The shilling is expected to remain strong against the US dollar on stable forex reserves which stands at USD 12.39Bn, sufficient for 5.3-months of import cover, a 34.7% spike from the USD 9.20Bn reported by end of December 2025.
The reserves were supported by 2.3% rise in diaspora remittances from USD 4,499.84Bn in the first11-months of 2024 to USD 4,601.26Bn in the first 11-months of 2025.
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Public Debt
In the one year ending 30th September 2025, total public debt stood at KES 12.05Trillion, a 11.7% growth of additional KES 1.26Tr. IN the nine months of 2025, Kenya’s debt rose by 10.3% from KES 10.93Tr to KES 12.05Tr.
Domestic debt grew faster at 21.1% or with additional KES 1,06Tr % from KES 5.61Tr in Sept-2024 to KES 6.66Tr in Sept- 2025. This saw domestic debt contribution to total debt expand to 55.3% in Sept-2025 up from 51.9% in September 2025 and 53.7% by end of the year 2024.
External debt rose by 4.0% from KES 5.19Tr to KES 5.39Tr while its contribution contracted from 48.1% to 44.7% as government funding shifted to local borrowings.
