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Equities Market
Equities’ prices maintained an upward trajectory in May 2025, supported by improving macroeconomic environment occasioned by low inflation and the ongoing interest rate cuts. This was further elevated by the 90-day pause on the US led trade tariffs imposed in April. The tariffs will resurface after 12th August 2025 when the 90-day pause lapses.
All the price tracking attracted major gains led by the Nairobi all-share index which attracted 6.4% on a general rise in prices across all the listed sectors. Consequently the market capitalization gather 6.5% from KES 1,981.79Bn in April 2025 to KES 2,111.21Bn in May 2025.
Monthly volumes traded jumped 39.3% from 359.55Mn to 500.88MN shares pushed up by increased activity in the telecommunication and the banking sectors on their good performance reported in the month. Increase activity were also noted in the insurance and energy sectors. Year on year however, the volumes were slightly lower.
This saw the month’s turnover up 18.0% month on month from KES 8.16Bn in April 2025 to KES 9.63Bn, led by the banking, real estate and telecommunication sectors which transacted KES 1,141.69Mn, KES 650.00Mn and KES 410.58Mn respectively.
Foreign participation thinned to 36.1% with a reduced net foreign outflows of KES 146.01Mn compared to an average of 59.5% foreign activity of KES 850.57Mn ne foreign outflows recorded in April 2025.
On individual company performance, Safaricom emerged the month’s top mover with KES 3,029.22Mn turnover after changing hands 156.05Mn shares, representing 42.5% and 31.2% of the month’s turnovers and volumes traded.
This was after Safaricom posted a 10.1% rise on its profits before tax from KES 84.69Bn in full year 2024 (FY2024) to KES 93.21Bn in FY2025, being the most profitable company in the region. Find our full earnings update on our website, research tab.
Equity Group came second with KES 1,162.61M turnover after trading 24.69Mn shares, especially before kits dividend book closure, which happened on 23rd May 2025. On its financial performance for Q1-2025, the Bank reported an 8.5% decline year on year from KES 20.41BN to KES 18.68Bn in Q1-2025.
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Bonds Market Performance
Secondary bonds trading activity remained relatively stable but with low ticket values changing hands. A total of KES 189.42Bn were transacted, 19.1% lower compared to KES 234.19Bn transacted in April 2025. The value traded was 58.5% higher year on year in relation to KES 119.53Bn traded in May 2024.
Normal papers remained the most traded papers supported by their yields which values them near their coupon levels compared to infrastructure bonds. Normal banks transacted KES 139.25 billion, accounting for 73.5% of the market value.
The re-opened FXD1/2022/25 re-issued in May 2025, emerged the month’s top mover with KES 34.98Bmn while its yield to maturity (YTM) moved down narrowly down from 13.975% to 13.950% against an accepted primary market YTM of 14.5384%.
Infrastructure paper transacted a total of KES 50.17Bn or 36.5% of the market totals, led by IFB1/2023/17 whose YTM moved down 54.1bps from 13.581% to 13.040%.\
May primary auction was oversubscribed at KES11.48Bn or 139.4% with the government accepting KES 93.1Bn, a 117.4% performance against the month’s target of KES 80.00Bn. In the June primary auction, we expect re-opening of normal bonds with ling-term durations of above 8-years as the government focuses on restructuring the public debt.
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Yield Curve
The yield curve continued experiencing mixed movements occasioned by the rate cuts, tight liquidity and investor preferences. The short end of below 5-years shifted down faster influenced by heavy demand in the section as the market remained starved of short-term papers.
The middle to the long-end curve generally shifted upon re-openings that happened in the section as the government appeared to be structuring its debt for breathing space. Immediately after these respective auctions, the yields edged down as investors demanded better returns from the secondary market.
In the month of June, we expect the government to persist in with long-term re-openings as we forecast the rates to stabilize at about 12.00%, government borrowing rate while the Central Bank Rate (CBR) is expected to narrow down.
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Money Market
Inflation
Inflation rate remained below the mid-point of government range of 5±2.5% at 3.8% in May 2025 compared 4.1% of April 2025, driven down by non-core inflation which fell from 8.4% in April to 6.0% in May 2025.
The decline in non-core inflation was majorly on low fuel prices occasioned by increased oil supply especially by the oil exporting countries which continue cooling the prices globally. This saw petrol, diesel and kerosene prices drop by a further 9.4%, 7.9% and 4.2% to KES 175.30, KES 165.64 and KES 149.78 per litre, respectively. This is in relation to KES 193.46, KES 179.91, and KES 169.52 per litre for petrol, diesel and kerosene on low landing costs.
Prices of processed food items however remained elevated to push the overall core inflation up from 2.5% in April to 2.8% in May 2025.
In the Month of June we expect inflation to average remain below the government mid-point at about 4.0%, held down by pump prices and some food prices, except for some cereals prices like maize whose price we expect to soar higher.
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Interbank
The interbank rate further thinned to 9.86% by end of May 2025, 11.6bps lower from that of 9.94%recorded by end of April. The drop followed the ongoing rate cuts effected in April which saw the official Central Bank rate drop from 10.75% in early April, the month before.
This was as liquidity demand remained low to average down 27.2% month on month from KES 10.17Bn to KES 7.41Bn.
The low liquidity demand saw banking excess reserves build up over three times up from KES 4.7Bn by end of April to KES 15.8BN by end of May 2025.
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Treasury Bills
Monthly treasury bills auctions were oversubscribed at KES 148.35Bn or 154.5% subscription against a KES 96.00Bn target, while the government accepted KES 136.44Bn or 92.0% of the subscribed amount. The accepted amount represent 142.1% performance against a target of KES 96.00Bn.
The performance was largely supported by maturities’ re-investments which stood at KES 130.74Bn for the month.
Returns on investments dropped gradually led by 12.0bps drop on the 91-day paper from 8.4434% to 8.2816%. The 182- and 364-day papers lost 0.4bps and 1.8bps to close the month with returns of 8.575% and 10.0026%, respectively.
In June 2025, we expect oversubscriptions to persist to be supported by reinvestments from the KES 93.03Bn maturing plus expected new investments.
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Currency
The Kenyan shilling remained stable in May 2025, averaging at KES 129.27 per US dollar, a marginal 0.2% m-m gain in comparison to an average of KES 129.51 exchanged in April 2025.
The performance was supported by enough forex reserves which improved 3.8% in the month from an average of USD 9,820Mn in April to KES 10,196Mn in May 2025, the highest reserves since 2019.
The foreign reserves were largely supported by inflows from forex remittances which stabilized at USD 422.89Mn in April 2024 and KES 422.90Mn in March 2024.
Further, the reserves benefitted from inflows from development partners especially from the World Bank and the Peoples republic of China.
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Public Debt
Provisional statistics from the National treasury and the Central Bank point public debt to have risen by 4.4% in the first three months of 2025, from KES 10,925.40Bn in Dec. 2024 to KES 11,365.00Bn by the end of March 2025. Year on year, total public debt rose 9.3% up or by KES 966.40Bn from KES 10,398.60Bn to KES 11,365.00Bn in March 2025.
Domestic rose faster at 4.4% in the first three months of 2025 from KES 5,868.30BN to KES 6,126.70Bn as the government grew its domestic borrowing. Year on year domestic debt jumped 17.0% up from KES 5.24 trillion (Tr) in March 2023 to KES 6.13Tr.
