Kenya’s capital markets staged a remarkable rebound in the third quarter of 2025, achieving their most vibrant performance in four years as investor wealth expanded sharply.
Latest figures from the Capital Markets Authority (CMA) show that total market value rose by Sh360 billion over the three months to September, lifting the market capitalisation to Sh2.78 trillion from Sh2.42 trillion in the previous quarter.
This surge, representing nearly 15 per cent growth, was fueled by rising share prices across leading companies and renewed confidence following regulatory reforms aimed at broadening access to the bourse.
The rally unfolded despite a notable rise in foreign investor exits, driven largely by domestic political tensions and ongoing international conflicts.
A wave of youth-led demonstrations against President William Ruto’s government, coupled with uncertainties from the Israel-Iran and Russia-Ukraine crises, prompted overseas investors to shift capital to safer markets. CMA data shows that foreign outflows jumped to Sh3.84 billion, up from just Sh177 million between April and May 2025.
“Foreign Investor Participation at the end of the Q3, 2025, averaged at 30 per cent, a decrease from Q2 2025 at 46.68 per cent. With the market recording an outflow of Sh3.9 billion compared to an outflow of Sh177 million between April and May 2025,” the regulator noted in its quarterly market report.
The impact of foreign withdrawals was softened by increased activity from domestic investors, who stepped in to maintain market stability. This surge in local participation boosted turnover by 60 per cent compared to the previous quarter, as investors responded to improved returns and confidence in ongoing market reforms.
The Nairobi Securities Exchange (NSE) posted gains across all segments, with equities, bonds, and collective investment schemes registering strong growth.
Equities led the recovery, with major indices achieving double-digit increases for a second consecutive quarter. The NSE 20 Index climbed 21.8 per cent to 2,972.64 points, while the NASI rose 35 per cent to 176.7 points compared to the first quarter.
CMA attributed the gains to reforms such as single-share trading, which now allows investors to acquire as little as one share, down from the previous minimum of 100.
The new initiative is designed to make stock market participation more inclusive and accessible, encouraging broader retail involvement and deepening liquidity.
“The quarter underscores Kenya’s continued transition toward an innovative, inclusive, and globally connected capital market,” said CMA acting director of policy and market development, Samuel Kamunyu Njoroge.
CMA Chief Executive Wyckliffe Shamiah described the reforms as transformative for the nation’s capital markets.
“The democratization of investing is finally here. Every Kenyan can now own a share of the nation’s growth,” he said, highlighting expectations that the policy will expand the investor base and improve market vibrancy.
The fixed-income market also recorded historic interest during the quarter. Treasury bonds worth Sh250 billion attracted bids totaling Sh713.15 billion, nearly three times the amount offered.
CMA noted that this oversubscription reflects growing investor confidence in Kenya’s financial instruments and the success of reforms in creating a resilient, accessible, and dynamic market.
