Equities Market
Stocks were further up 6.5% on average in October 2025 as the market continued to reap from the improving macro- economic environment sustained by the rate cuts, low inflation and muted tax reviews. Large and medium capitalization counters saw NSE 25 gain the most at 8.1% followed by the top ten most liquid counters, NSE 10, 7.1% while NSE 20 attracted 4.8%. Year to date, prices were up 50.2% while expanding 60.1% year on year.
The Banking index launched on 1st October 2025, contracted 8.1% on its first month of tracking despite the boom witnessed in the sector, occasioned by better earnings.
Value traded dipped by half month on month from KES 22.92Bn to 11.46Bn eroded by a 45.0% decline in shares traded from 847.76Mn to 466.56Mn shares. Year on year however, October 2025 out-performed October 2024, largely supported by price recoveries in most stocks and a shift in attention to stocks on low interest rates and improved price valuations.
Foreign participations improved from 27.8% in September to 36.0% in October 2025 but remained low in comparison to that of October 2024. Month on month rise in foreign activity saw net foreign outflows diminish from KES 31.64Mn to KES 10.10Mn as some foreigners took positions in local stocks while interest rates in most developed countries were reviewed down.
Market concentration remained in the telecommunication and banking sectors, which controlled the market at 37.8% or KES 4.34Bn and at 37.6% or KES 4.13Bn of the entire market turnovers traded. Cumulatively, the two sectors commanded 75.5% of the market value and 50.8% of the volumes traded. The energy and the manufacturing sectors occupied thirds and fourth positions as the two sectors also recorded notable attention resulting to price upticks.
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Safaricom took market focus and retained the top mover position with KES 6.87Bn turnover after exchanging 239.86Mn shares whose price went up 2.2% from KES 28.90 to KES 29.55 per share. The telco’s price surge remains supported by expectations of better earnings for HY2026 due on 6th November 2025 by local investors especially corporates.
The telco giant, however contributed the most to the total market net foreign outflows with KES 1.28Bn on heavy foreign sales of KES 2.79Bn or 40.7% of all its sales transactions compared to a 22.1% or KES 1.51Mn foreign buys.
Banks took the rest of the month’s top five movers led by the top tier 1 banks, Equity Group, KCB Group, Co-op Bank and Absa Bank Kenya, in that order.
Equity Group transacted KES 4.13Bn from 130.01Mn shares whose price jumped 9.5% up from KES 58.00 to KES 63.50 per share on prospects of better returns and improved price value right from its HY2025 financials. The price surge also followed the announcing of KES 65.58Bn profits before tax (PBT) for the first three quarters of 2025 reported on 30th October 2025, representing a 28.5% year on year (y-y) jump compared to KES 51.02Bn announced by end of September 2024. The performance was supported by higher interest income from loans, low cost of financing and a muted operating cost, find our earnings update earlier shared for more.
KCB Group took third mover position with KES 3.78Bn after transacting 89.54Mn shares, while its price improved on stellar financials for Hy2025 and better prospects for both Q3-2025 and FY2025.
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Bonds Performance
October 2025 primary auction was oversubscribed with a total of KES 118.89Bn while the government accepting KES 85.27Bn, to represent a 170.5% performance against a target of KES 50.00Bn for budgetary support.
The oversubscription was occasioned by KES 48.155Bn coupon payouts, KES 11.00Bn corporate bond payout for EABL redeemed before maturity, plus other new investments brought about by improved liquidity environment.
We expect KES 78.30Bn coupon payouts in November and KES 72.90Bn maturity and coupon payouts in December 2025. We further anticipate the early redemptions of KES 30 billion for FXD1/2023/003 to support liquidity in both November and even rollover to December 2025.
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Yield Curve
The yield curve shifted upwards in October 2025 informed by attractive re-openings for November’s auction. This was further supported by low demand in the primary auction where the government is seeking only KES 40 billion. This was further informed by a tactical move by investors to push yields higher which will influence the primary auction pricing for better discounts.
In November, we forecast a downward shift in overall yield curve as the interest rate cut transmission takes effect. On average, we expect a drop of about 25.0bps across the curve.
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Money Market
Economic Update
The Central Bank monetary policy (MPC) effected an eight consecutive interest rate cut of 25.0bps from 9.50% to 9.25% on 7th October 2025, in an aim to foster economic growth by stimulating commercial lending to the private sector. The past rate cuts have so far witnessed improved private sector credit from a contraction of 2.9% in Jan-2025 to 2.2% in June and 5.0% by end of August 2025.
The favorable credit growth rate for a stable economic growth is projected at above 12.0% with an inflation range of 5±2.5%.
Inflation remains within the above government target range, stabilizing at 4.6% in September and October 2025, supported by food prices on increased supply especially for maize after the October harvest especially from the western part of Kenya.
The interbank rate continues to track the above Central Bank Rate (CBR), declining by 26.6bps between end of September and end of October 2025.
Forex reserves remain stable at USD 12.19Bn, sufficient for 5.3-month of import cover, supported by the October 2025 Eurobond receipts, diaspora remittances and inflows from agricultural exports. All these combined continue backing up the local currency.
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Interbank
The interbank declined followed the CBR rate with a 27.0bps drop from 9.55% to 9.24% pushing the average interbank rate 23.0bps down to 9.32%.
The interbank decline was favored by a relatively fair liquidity environment which saw volumes traded sink 13.8% from KES 10.85Bn to KES 9.35Bn. As such, average liquidity demand also went down 3.4% to KES 12.02Bn.
Bank excess reserves accelerated up from KES 2.40Bn by end of September to KES 12.40Bn on 31st October, to benefit from the above improved liquidity.
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Treasury Bills
Ongoing interest rate cuts continue to see reduced traction in the treasury bills market, evidenced by low re-investments. In October, T-bills were undersubscribed at 97.6% or KES 93,72Bn against a KES 96.00Bn target. This is despite the sector maturities standing at KES 125.03Bn in October 2025.
In November 2025 T-bill maturities are projected at KES 147.55Bn part of which we expect to be re-invested back.
Investors’ preference however remained on the 364-day paper on what is view to be its relatively higher returns of 9.3467% as at the end of October. The 91- and the 182-day papers are currently trading at returns of 7.829% and 7.865% respectively.
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Currency
The Kenyan shilling remained stable in October 2025, trading at an average of KES 129.24 per US dollar largely supported by sufficient forex reserves which emanated from a Eurobond issuance, strong diaspora remittances and receipts from agricultural exports.
Forex reserves hit a new high of USD 12.19Bn, enough for 5.3-months of import cover against a 4.0-months regulatory requirement.
September 2025 diaspora remittances declined 1.5% from USD 426.13Mn to USD 419.63Mn but remained slightly up in relation to USD 418.50Mn of September 2024.
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Public Debt
Provisional statistics from the Central Bank of Kenya point Kenya’s debt at KES 11.97 trillion as of end of August 2025, reflecting a 11.5% surge from that of KES 10.73Tr reported similar period in 2024.
Domestic debt rose faster at 18.1% year on year from KES 5.56Tr to KES 6.56Tr while external debt rose at 4.4% from KES 5.18Tr to KES 5.40Tr by end of August 2025.
