Equity investors at the Nairobi Securities Exchange (NSE) outperformed all other major asset classes in the first half of 2025, registering the highest returns as investor wealth surged by 25 percent—an equivalent of Sh477.3 billion. This impressive performance eclipsed returns from fixed income instruments, fixed deposits, and real estate, positioning equities as the top investment choice over the period.

The stellar returns were largely driven by a rally in the second quarter, fueled by renewed local and foreign investor interest in large-cap counters such as Safaricom, KenGen, KCB Group, and NCBA Group.

📈 Safaricom alone added Sh318.5 billion in market capitalization, reaching a valuation of Sh1 trillion after its share price climbed 46.6 percent to Sh25.

⚡ KenGen more than doubled in value, rising 104.9 percent to Sh7.46, adding Sh25.2 billion in investor wealth.

Other notable gainers included NCBA (+Sh18.62 billion), KCB Group (+Sh16.06 billion), and Kenya Power (+Sh13.06 billion), reflecting widespread positive sentiment across the bourse.

Bull Run Defies Economic Headwinds

Despite economic and geopolitical shocks—including anti-government protests in Nairobi and the United States’ announcement of broad tariffs earlier this year—the NSE continued its upward trajectory. Investors shrugged off the risks, drawn by improved market fundamentals and expectations of strong corporate earnings, especially in the banking sector.

According to analysts, this performance marked not just a rally but a continuation of a recovery that started in 2024, when investor wealth at the NSE grew by 34 percent or Sh500 billion after a two-year bear run.

“The 2024 gains were largely a recovery, but with fundamentals improving and interest rates falling, 2025 is shaping up to be a bullish year,” noted Wesley Manambo, Senior Research Associate at Standard Investment Bank. “We expect select sectors to benefit further as investors adopt a more risk-on approach.”

Small Caps Join the Party

The market rally was not limited to blue-chip firms. Several small-cap stocks experienced dramatic price gains, mainly driven by speculative demand.

• TransCentury surged 187.2 percent to Sh1.12, despite being placed under receivership by Equity Bank in June.

• Sameer Africa rose 84.4 percent to Sh4.48.

• Home Afrika gained 83.8 percent to Sh0.68.

• Uchumi Supermarkets climbed 70.6 percent to Sh0.29.

Why Other Asset Classes Lagged

While equities soared, returns from fixed income and real estate paled in comparison:

• Treasury bill rates fell significantly: 8.13% (91-day), 8.46% (182-day), and 9.72% (364-day) by end of June, down from highs of up to 11.4% in December 2024.

• Bond yields also declined to a range of 13.5% to 15.7%, from 14.7% to 18.9% a year earlier.

• Fixed deposit rates in banks dropped to an average of 8.87% in April, from 10.45% in December.

• Unit Trust Money Market Funds (MMFs) saw yields compress, with average returns dropping to between 4.73% and 13.47% in June, down from 7.03% to 16.8% in December.

The decline in yields was in line with the Central Bank of Kenya’s monetary easing policy, which saw the base rate cut from 11.25% in December 2024 to 9.75% in June 2025. As interest rates declined, banks transmitted the reduction to customers, making savings and fixed income products less attractive.

Real Estate Stagnation

In the property market, prices remained sluggish. Land and housing prices in Nairobi and surrounding towns grew by only 1.7 to 2.5 percent in Q1, according to data from HassConsult, underlining limited short-term gains for investors in this sector.

The NSE’s first-half performance highlights a clear shift in investor preference toward equities, driven by price recoveries, lower interest rates, and bullish sentiment across key sectors. While fixed income and real estate offered more stable but lower returns, the stock market proved to be the best-performing investment class—giving equity investors the upper hand at the halfway point of 2025.