[Graph in pdf]
Equities Market
Equities maintained an uptrend in the month of August 2025, attracting an additional 7.7% gain as measured by the Nairobi all-shares index which moved from 160.22 to 172.60 points. NSE 20 counters jumped up 11.2% up followed by NSE 10 and NSE 25 with gains of 8.3% and 7.5%, respectively. The market remained elevated by the rate cuts which saw interest rates drop for the seventh consecutive time to 9.5% in August 2025. Further, the surge was informed by expectations of better returns following a stellar half year 2025 (HY-2025) financials which saw some counters declare interim dividends in the month.
Year to date (y-t-d) and year on year (y-y), the market was up 37.7% and 66.5% on average, respectively. In the three months and 6-months to the end of August, the market gained 28.6% and 30.6% in that order.
Market value traded however dropped 15.0% from KES 12.51Bn to KES 10.64Bn on market focus on low priced counters and a 0.7% decline in the number of shares traded from 487.14Mn to 483.90Mn shares.
Foreign activity remained relatively stable and low at 31.3% with a spike in net foreign inflows of KES 1,670.70Mn compared to a 31.1% average foreign participation of KES 523.98Mn net foreign outflows traded in July 2025.
Market attention remained in the Banking and the telecommunication (Safaricom) sectors which transacted KES 5,101.44Mn and KES 3,344.15Mn from 124.51Mn and from 121.86Mn shares, respectively. The two sectors accounted for 78.5% and 51.1% of the turnover and shares exchanged, see below:
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Heavy focus on Safaricom saw it emerge the month’s top mover with KES 3,344.15Mn after changing hands the most shares of 121.86Mn shares. The counter witnessed heavy foreign inflows of KES 760.92Mn on improved foreign inflows which saw its average foreign activity rise from 45.2% to 57.5%. Consequently the counter’s price expanded 8.7% month on month (m-m) from KES 26.30 to KES 28.60 per share. Year to date and year on year, Safaricom price surged.
Further, Safaricom Ethiopia hitting a 10.1Mn three month active subscribers continue to support price on a positive reflection of returns from Ethiopia even as the break-even period nears in March 2027. We project a continued rally supported by investors shunning other investments in favor of equities.
KCB Group took second mover position with a 1,721.27Mn turnover after trading 32.97MN shares. This was as the counter’s valuation improved from KES 54.00 t 60.06 per shares after posting a 7.1% growth in profits before tax to KES 40.32Bn. As such, KCB Group’s price spiked 14.5% m-m and 70.5% y-y to KES 54.25 per share, supported by a KES 4.00 interim dividend whose book closure and payments dates are 3rd September and 11th November 2025 respectively.
Equity Group followed in third position with KES 1,620.15Mn from 30.02Mn shares, also supported by improved valuation and increased foreign entries. The counter’s value rose to above KES 60.00 per share after reporting an 11.8% jump in its PBT to KES 41.54Bn.
[Graph in pdf]
Secondary Bonds Market Performance
Secondary bonds trading transacted KES 207.18Bn in August, a7.3% decline from that of KES 223.45Bn traded in the month of July 2025. This is despite a 10.4% rise in the market activity from 3,272 deals to 3,612 deals in August 2025.
Market focus shifted to the on the run papers issued in both August and July 2025, led by IFB1/2022/19 which emerged top mover after entering the secondary market. This was also influenced by the tap sale of August 2025.
We project heavy activities to remain on the recently re-opened papers especially as investors rush to cash in while yields stabilize down.
[Graph in pdf]
Primary Market Performance
August 2025 primary auction saw a total of KES 530.89Bn subscribed with the government accepting KES 274.79Bn, representing a 196.3% performance against the KES 140Bn target. The performance was largely supported by issuance of infrastructure bonds papers which we view attracted heavy foreign investments, on their tax free nature.
Further, issuance of a tap-sale provided more room for investors to source funds while also enabling the heavy rejections to be re-invested back. In the main auction, the government had accepted only KES 95.01Bkn or 29.4% from a total of KES 323.43Bn subscribed.
The performance was also supported by the heavy payouts of KES 181.66Bn, out of which KES 94.64Bn were maturity amount for FXD1/2023/002 and KES 87.02Bn were coupon payouts, which happened in August 2025.
[Graph in pdf]
Yield Curve
The yield curve shifted downwards month on month in August 2025, informed the constant rate cuts following a government determination to lower interest for economic growth through credit from commercial banks.
The yield curve around the 15-year experienced faster downward shifts occasioned by the primary paper IFB1/2022/019 entering the secondary market where some investors cashed some premiums immediately after the primary auction.
The yield curve also around 9-year paper also shifted down faster slightly occasioned by increased demand on the IFB1/2018/015 (7.5-years) paper.
[Graph in pdf]
Money Market
Monetary Policy & Inflation Movement
The Central Bank Monetary Policy Committee (MPC) lowered the official base lending rate by an additional 25.0bps from 9.75% to 9.50% supported by low inflations, stable exchange rate and efforts to support economic growth through access to credit. August 2025 inflation hit a 12-month high of 4.5% from that of 4.1% of July 2025 and 4.4% of August 2024. The rise was mainly driven by food and non-alcoholic beverages which went up by 8.3% plus price rises in transport which expanded by 4.4%.
- Maize and sugar prices surged 18.7% and 17.9% to KES 176.32 and to KES 350.00 per 2-kg packet, respectively. We however project the prices of maize to start declining as from October on effect of from the harvesting season of Kenya’s food basket region, western Kenya.
- The surge in transport follows the upward review of fuel prices which saw that happened in July 2025 by the Energy and Petroleum Regulatory Authority (EPRA).
In the month, the Central Bank issued a revised risk based credit pricing model (RBCPM) which was effected on 1st September 2025 for new variable rate loans except for existing loans whose implementation will happen on 28th February 2026. The RBCPM will now be based on the interbank overnight rate, renamed as the Kenya shilling Overnight Interbank average (KESONIA) plus a premium referred to as K plus other charges and fees, i.e Total Cost of Credit k= KESONIA + K + Fees & Charges. The total cost of credit can be accessed through the Total Cost of Credit website.
[Graph in pdf]
Interbank
The interbank declined marginally at 2.0bps from 9.75% 31st July 2025 to 9.59% by end of August 2025. Average interbank was down 9.4bps from 9.63% to 9.54%. The decline was however lower compared to a 25.0bps cut on the official Central Bank rate (CBR) which fell from 9.75% to 9.50%.
Liquidity demand improved 184.8% m-m from KES 8.40Bn to KES 23.02Bn to elevate the month’s average liquidity demand at 43.6% from KES 10.45Bn to KES 15.00Bn. The rise was mainly occasioned by liquidity demand towards settlement of the August primary bond auction.
Banking excess reserves expanded 288.6% m-m from KES 4.40Bn to KES 17.10Bn.
[Graph in pdf]
Treasury Bills
Monthly T-Bills auctions was undersubscribed at KES 89.94Bn while the government accepting a total of KES 86.79Bn, representing 96.4% acceptance and 90.3% performance against a KES 96.00Bn target.
The performance was supported by roll-over reinvestments from a total of KES 88.83Bn that matured due in August 2025.
Returns on investments across the three papers edged down with that on the 182-day papers dropping faster at 34.8bps from 8.4186% to 8.0706% followed by the 364 and 91-day paper, whose returns declined by 14.6bps and 11.7bps to 9.5734% and 8.000% respectively.
In September, we project further declines in the overall returns at about 10 to 15 basis points across the three paper
[Graph in pdf]
Currency
The Kenyan shilling remained stable in the month of August trading at an average of 129.24 against the US dollar. Against the British pound, Euro and Japanese yen however, the shilling lost 1.7%, 1.9% and 1.3% respectively.
The performance remained supported by sufficient forex reserves of USD 10,889Mn, sufficient for 4.8-month of import cover.
Foreign remittances declined for the third month at 3.0% from USD 422.83M to KES 410.09Mn partly impacted by the new tax on US remittances of 3.8%.
[Graph in pdf]
Public Debt
Total public debt stands at KES 11.49 trillion as of April 2025 according to the official statistics from the Central Bank dated April 2025. This represents a 5.2% rise in in the first four months of 2025 compared to KES 10.93Tr recorded as of 31st December 2025. Year on year public debt has expanded 9.2% from KES 10.52Tr to KES 11.49Tr.
External debt surged at 5.3% in the first five four months of 2025 from KES 5.06Tr on 31st Dec. 2025 to KES 5.33Bn in April 2025. Domestic debt added an addition 5.0% in the same period from KES 5.87Bn KES 6.16Tr.
