Equities Market
Equity markets maintained an upward momentum into the second week of the year, to register a 2.4% average gain. NSE 20 had the most gain at 3.0% followed by NSE 25 counter with a 2.5% growth while NSE 10 had a 2.4% jump. The banking sector recorded an average gain of 3.6%, which we attribute to early investor positioning ahead of the sector’s earnings season expected in March.
Market activity picked up momentum during the week, with turnover more than tripling to KES 3.50Bn from KES 1.07Bn, reflecting resumption to normalcy in the telecommunications, banking and energy sectors. This saw total volumes traded increase by 173.4% week on week to 130.52Mn shares from 47.74Mn shares.
Foreign investor participation edged up week-on-week to 43.1% from 16.4% with the market recorded a net foreign inflow of KES 68.10Mn from KES 6.99Mn in the prior week. Notable net foreign inflows were observed in Equity Group and KCB Group, while Safaricom and EABL registered significant net foreign outflows.
Investor activity was largely concentrated in the banking, telecommunication and Energy & Petroleum sectors, which collectively accounted for 94.2% of total market turnover and 76.9% of total shares traded.
Safaricom retained its position as the top mover for the 3rd consecutive week with a turnover of KES 1416.67Mn, from KES 362.96Mn in the previous week, largely supported by a spike in foreign activity to 67.0%. Traded volumes spiked to 48.72Mn shares from 12.94Mn shares, while the share price rose by 2.1% to close at KES 29.10 from KES 28.50. The counter sustained heavy foreign sales of 80.5% in relation to foreign buys of 53.4% to emerge top with net foreign outflows of KES 384.16Mn.
Equity Group ranked second, posting a turnover of KES 692.58Mn from KES 128.77Mn as average foreign activity grew to 44.50% from 19.42% the week before. The counter’s price grew by 3.7% to close at KES 69.50 per share.
KCB Group ranked third with a turnover of KES 431.75Mn, with 6.50Mn shares traded compared to 0.55Mn shares in the previous week. The share price gained 1.9% to close at KES 67.00.
On the gainers’ board, Car & General led with a 12.3% increase, closing at KES 57.25 per share from KES 51.00 in the prior week. Kenya Power jumped by 10.7% to KES 15.05 from KES 13.60, while Co-op Bank rose by 8.6% to close at KES 25.95 per share from KES 23.90.
[Graph in PDF]
Bonds Market
The secondary bonds market recorded a significant improvement, with the value traded jumping by 82.3% from KES 23.16Bn to KES 42.24Bn. This surge was accompanied by a 54.6% growth in the number of transactions from 390 deals to 603, which we attribute to the start of normal trading activities after the festive holiday.
The most traded bond during the week was the FXD1/2021/20-year bond, which posted KES 7.03Bn in turnover compared to KES3.22Bn last week. FXD1/2018/15yrs was the second most traded paper, with a turnover of KES 6.20Bn.
We anticipate that market activity will increase in the coming weeks as the January 2026 papers, FXD1/2019/020 (13.2-year tenor, 12.873% coupon) and FXD1/2022/025 (21.8-year tenor, 14.188% coupon), enter the secondary market.
[Graph in PDF]
Yield Curve
The yield curve recorded an overall downward shift this week after the auction that took place on Wednesday 7th January 2026.
A downward shift was noted on the medium and long term papers largely influenced by the closure of the primary auction of FXD1/2019/020 (13.2-year tenor, 12.873% coupon) and FXD1/2022/025 (21.8-year tenor, 14.188% coupon) which took place on Wednesday 7th January 2026.
Looking ahead we expect a mixed reaction due to the auction for the switched paper as well as the entry of the January 2026 papers into the market.
[Graph in PDF]
Interbank
The interbank rate closed the week at 8.97%, marking a marginal decline from 8.99% in the previous week while the average interbank rate dropped marginally from 8.99% to 8.98% clearly depicting relative improvement of liquid in market.
Closing liquidity demand dwindled by 20.3%, whereas the average weekly demand fell by 25.4%, from KES 8.49Bn to KES 6.33Bn which suggested that minimum to no funding pressure was present in the market during the week.
Bank excess reserves contracted 23.4% down from KES 18.0Bn to KES 13.80Bn largely attributed by the pay as you earn (PAYE) tax payment that happened on 9th January 2026.
[Graph in PDF]
Treasury Bills
The weekly Treasury bills auction was oversubscribed at 130.28%, with total bids received being KES 31.27Bn against the KES 24.0Bn on offer of which KES 26.15Bn was accepted.
Investor focus was on the 364-day paper with 173.2% oversubscription or KES 17.32Bn, while KES 12.24Bn was accepted. Similarly, the 91-day paper saw an increase in demand, achieving a 108.5% subscription with bids totaling KES4.34Bn, were KES 4.32Bn was accepted.
Conversely, the 182-day paper was undersubscribed, highlighting a preference by investors to short and long term papers.
[Graph in PDF]
Currency
In the second week of January, the Kenyan shilling remained stable, closing the week at KES 129.01 against the US dollar. Over the period, the currency appreciated by 0.4% against the British Pound, 0.4% against the Japanese yen and 0.9% against the Euro.
Foreign exchange reserves marginally declined to USD 12.38Bn, equivalent to 5.30 months of import cover, which continues to remain well above the Central Bank of Kenya’s statutory minimum requirement of 4.0 months. The sustained reserve buildup has been supported by resilient diaspora remittances and robust agricultural export earnings.
We expect some pressure on the forex reserves in both January and February upon Eurobond coupon payments due in the period.
