(NAIROBI, KENYA) – The Nairobi Securities Exchange (NSE) has shed KES 158 billion ($1.22 billion / GBP 967 million / EUR 1.13 billion) in investor wealth over the past week after the share prices of blue-chip firms retreated under pressure from investors keen to profit from the market rally through August.
Market capitalisation, the measure of investor wealth, dipped to KES 4.126 trillion ($31.9 billion / GBP 25.3 billion / EUR 29.5 billion) as at the close of trading on Tuesday, from its all-time high of KES 4.285 trillion ($33.2 billion / GBP 26.2 billion / EUR 30.6 billion) achieved on September 3.
The sales at the NSE have also come in the wake of rising jitters among international investors over the escalation of tensions in the Middle East and the direction of US interest rates.
Large stocks, including Safaricom, Equity Group, KCB Group and Co-operative Bank of Kenya, have led the market correction, collectively accounting for KES 113.6 billion ($879 million / GBP 696 million / EUR 812 million) in capital losses over the period.
The valuation loss comes on the back of a strong rally at the bourse from mid-August, when it crossed the KES 4 trillion ($31 billion / GBP 24.5 billion / EUR 28.6 billion) market cap milestone for the first time. This rally was primarily driven by the same large counters that are now subject to profit-taking, with Equity, KCB and Co-op Bank touching all-time highs of KES 106, KES 98.55 and KES 38.55 per share a week ago.
Safaricom share price closed at KES 36.50 on Tuesday, meaning its valuation has declined by KES 58 billion ($449 million / GBP 355 million / EUR 415 million) since September 3 to KES 1.46 trillion ($11.3 billion / GBP 8.9 billion / EUR 10.4 billion). Equity closed at KES 101.75 per share, cutting its valuation by KES 16 billion ($124 million / GBP 98 million / EUR 114 million) from its all-time peak of KES 400 billion ($3.1 billion / GBP 2.4 billion / EUR 2.9 billion).
KCB’s share price stood at KES 90 at close of trading on Tuesday, meaning its valuation has dropped by KES 27.4 billion ($212 million / GBP 168 million / EUR 196 million) to KES 289.2 billion ($2.24 billion / GBP 1.77 billion / EUR 2.07 billion). Co-operative Bank has meanwhile shed KES 13.8 billion ($107 million / GBP 84.5 million / EUR 98.6 million) to stand at KES 212.4 billion ($1.64 billion / GBP 1.30 billion / EUR 1.52 billion), after its share price dropped to KES 36.20.
“The correction on large counters over the last few days is mainly due to investors taking profits and locking in substantial capital gains after the strong rally over the first half of the year,” said Melodie Ndanu, a research analyst at Standard Investment Bank.
“Investors are also pricing in the potential impact of higher crude oil prices on inflation following the developments in the US-Israel-Iran tensions, and the implications of the upcoming decision by the US Federal Reserve regarding interest rates given economic conditions.”
Due to the rising geopolitical tension, the rate on US 10-year bonds hit the key 5% threshold for the first time since 2023 on Monday, as markets priced in the likelihood of the Fed keeping its interest rates higher for longer on renewed inflation pressure.
The benchmark US 10-year bond rate is a closely watched gauge of market inflation expectations, with its movement influencing investor activity across the globe.
For the equities markets, higher US bond rates tend to cause capital flight from smaller, riskier markets, especially when they are accompanied by a strengthening of the dollar in the forex market.
The capital flight ultimately weighs down share prices of stocks that are favoured by foreign investors.
On the NSE, foreigners cashed in on shares worth KES 4.55 billion ($35.2 million / GBP 27.8 million / EUR 32.5 million) in August, taking advantage of a rally in blue-chip share prices to secure profits on their investment.
“Foreign investors may also be using the rally opportunity to exit and reallocate funds toward safer global assets as the global outlook shifts,” said Ms Ndanu.
Market trade data shows that their net sales accelerated in the second half of last month, coinciding with the period when stocks such as Safaricom, Equity and KCB were climbing towards multi-year or all-time highs.
In the first two weeks of September, foreigners have made further net outflows of KES 1.6 billion ($12.4 million / GBP 9.8 million / EUR 11.4 million), even as some locals join in the sales to lock in their own profits.
The foreign traders usually concentrate their activities on these select large and liquid stocks, alongside others such as Co-operative Bank and EABL, that have the necessary liquidity to support sizeable trades and ease of entry and exit.
The stocks being offloaded by foreigners were taken up by local corporate investors, primarily cash-rich fund managers and pension funds that have been diversifying from government bonds whose interest rates have declined.
A larger number of NSE stocks have gained visibility among foreign investors due to their inclusion in the closely watched Morgan Stanley Capital International (MSCI) emerging and frontier market indices, amplifying foreign inflows and outflows.
Kenya is represented by 17 companies on the MSCI Frontier and small-cap indices that are selected based on a number of metrics, including liquidity and financial stability, giving them exposure to foreign investors that boosts their price discovery.
Safaricom, Equity Group, EABL, KCB Group, Co-operative Bank and Standard Chartered Bank Kenya are listed on the MSCI Frontier Markets Index, as at the most recent review of May 2026.
BAT Kenya, KenGen, Kenya Re, Kenya Power, DTB Group, Carbacid, Bamburi Cement, Jubilee Holdings, CIC Insurance Group, Centum Investment and HF Group are on the MSCI Frontier Markets Small Cap Index.
Other countries included on the frontier markets indices are Zimbabwe, Tunisia, Morocco, Nigeria, Senegal, Mauritius and Côte d’Ivoire. South Africa, which has the largest and most liquid stock market in Africa, and Egypt are classified as emerging markets by the MSCI.