Local corporate investors have continued to hold a greater share of equities at the Nairobi Securities Exchange (NSE) than local individuals, after shifting their investments from treasury bills and bonds.
Share of equities trading controlled by local institutional investors jumped to 67.66% in the quarter ended June from 52.25% in the first quarter of 2025. Local investors’ share fell to 15.22% in the second quarter of 2025 from 30.58% in the first quarter.
The shift has been mainly driven by the high returns of stocks at the NSE compared to bond yields, and the robust performance recorded by the Kenyan bourse since 2024.
In 2024, yields on government bonds hit a peak of 18.5% from an average of 12% in 2022. This saw corporate investors pump their money into government papers. Kenya was on the brink of defaulting on the $2 billion Eurobond payment that was coming up forcing the government to increase its borrowing. In a bid to lower its cost of borrowing, the government has reduced the interest to an average of 14%.
“Last year, institutional investors had lower investments in the bourse because of high interest levels, while there was a slack in buying equities on the fear that the uptick would not last,” ICEA Lion Group Senior Portfolio Manager Esther Muchai said.
Nairobi Securities Exchange Performance
Since January 2024, the NSE has recorded a strong performance. The NSE All Share Index (NASI) increased by 34% to 123.48 points from 92.11 points in 2023. The volume of shares traded increased from 3.6 billion in 2023 to 4.8 billion. Equity turnover increased by 20% reaching 105.9 billion from 88.2 billion in 2023. Market capitalization stood at KES1.9 trillion, up by 36% from KES1.4 trillion in 2023.
From January 2025 to date, the NSE All Share Index has gained by 30.83%, Market Cap by 30.83%, Volume traded by 30.7% and Equity turnover by 61.9%. This sterling performance has increased local corporate investors’ appetite for shares at the NSE.
Drop in household disposable earnings
With the enactment of the Finance Bill 2023, the pay slips of Kenyan employees have grown thinner, following new tax and levy changes. The rise in deductions has greatly reduced retail investors’ purchasing power on the securities exchange.
“Retail Investors have a limited pool of funds. If they locked those funds last year and they are not having more lows this year at a personal level, then they would not have more to invest,” said Esther Muchai.
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