(NEW YORK, US) – Foreign investors sold KES4.55 billion ($27.9 million / £22.9 million) worth of shares on the Nairobi Securities Exchange in August, the largest monthly outflow in 10 months, as they moved to lock in profits from a sharp rally in blue chip stocks.
Net sales by foreign traders rose sharply from KES1.35 billion ($8.3 million / £6.8 million) in July, according to market trade data. The selling gathered pace in the second half of August, when Safaricom, Equity Group, KCB Group and Co-operative Bank of Kenya touched multi-year or record highs.
Safaricom, the largest listed company on the Nairobi bourse, is trading at KES37.65 ($0.23 / £0.19) per share, a gain of 33% since the start of the year. Equity Group reached an all-time closing high of KES106 ($0.65 / £0.53) on Friday, having climbed 57% since January. KCB touched a record KES99.25 ($0.61 / £0.50) on Wednesday, marking a 49% rise in the year to date.
Foreign traders tend to focus on large and liquid counters, including Co-operative Bank of Kenya and East African Breweries Plc, because these stocks allow easy purchase and sale of large volumes of shares.
The shares being offloaded by foreign investors have been absorbed by local institutional buyers, mainly cash-rich fund managers and pension funds. These investors have been shifting money away from government bonds, where interest rates have fallen.
Data from the Retirement Benefits Authority shows that in the six months to June 2026, pension funds increased their investment in listed equities by KES130.51 billion ($800.7 million / £657.5 million) to KES443.35 billion ($2.72 billion / £2.23 billion), a rise of 41.7%.
Equities now account for 14.37% of total pension assets, the highest level in five years, up from 11.13% at the end of last year. Over the same period, pension funds reduced their holdings of government securities by KES35.14 billion ($215.6 million / £177 million), or 2.4%, to KES1.43 trillion ($8.77 billion / £7.2 billion) from KES1.47 trillion ($9.02 billion / £7.4 billion).
The rotation into equities has coincided with a strong recovery on the Nairobi Securities Exchange, supported by better corporate earnings, dividend payouts and renewed confidence among local investors.
For foreign investors, the rally has provided a chance to exit at premium prices, rewarding those who bought shares during the bear market between 2015 and 2023. That period was marked by weak local investor participation, leaving foreign investors to dominate trading with activity levels of up to 80%.
Foreign investors are also eyeing better returns from developed markets, particularly the US, where interest rates have risen because of higher global inflation linked to the conflict in the Middle East. Higher US rates and the dollar’s status as a safe haven during geopolitical shocks have prompted some investors to pull capital from riskier emerging and frontier markets such as Kenya.
The Nairobi Securities Exchange has gained more visibility among foreign investors after additional stocks were included in the closely watched Morgan Stanley Capital International (MSCI) emerging and frontier market indices. This has amplified both foreign inflows and outflows.
Kenya is represented by 17 companies on the MSCI frontier and small cap indices. Selection is based on factors including liquidity and financial stability, which expose the stocks to foreign investors and support price discovery.
Safaricom, Equity Group, East African Breweries, KCB, Co-operative Bank and Standard Chartered Bank Kenya are listed on the MSCI frontier markets index as at the most recent review in 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 on the frontier markets indices include Zimbabwe, Tunisia, Morocco, Nigeria, Senegal, Mauritius and Côte d’Ivoire. South Africa and Egypt are classified as emerging markets by MSCI.