Investors at the Nairobi Securities Exchange (NSE) experienced a steady expansion in paper wealth by KSh531 billion in the three months to June attributable to strong performance by the banking sector and activity in blue chip desks, the latest report by the Capital Markets Authority (CMA) shows.

CMA's second quarter bulletin states that the Nairobi All Share Index (NASI) increased by 15.05 percent closing at 224.15 points in June even as the NSE 20 Share Index expanded by 9.44 percent to 3,755.44 points.

During the quarter, market capitalisation of the Nairobi bourse grew by 16.44 percent to Ksh3.76 trillion, up from KSh3.23 trillion in the quarter ended March 31.

During the quarter under review, CMA cited strong corporate earnings on listed companies in East Africa's largest economy especially on NSE Banking Index counter which reported over 30 percent rally.

Product diversity

“The entry and expansion of these intermediaries will contribute to increased market depth, improved product diversity, enhanced investor choice and strengthened confidence in Kenya’s capital markets,” said CMA Chief Executive Wyckliffe Shamiah, as the regulator licensed a wave of new investment firms and fund managers during Q2.

Across the quarter, the National Treasury raised KSh382 billion through the issuance of fresh bonds and re-openings, which continues to show investor appetite in government paper.

However, the secondary market reported a 6.7 percent contraction to KSh621.83 billion compared to a similar quarter in 2025. 

Kenya's bond market has experienced a higher-yield environment attributable to the Central Bank's move to keep the benchmark lending rate at 8.75 percent to check on inflation amid global uncertainty due to oil price swings. 

At the same time, Nairobi's derivatives market experienced a rise during Q2, with turnover increasing by 0.7 percent to Ksh320 million even as the number of deals edged up by 5.39 percent to 684.

Derivatives market

Overall, CMA said the turnover on derivatives increased to KSh704.5 billion, reflecting tripple growth compared to the whole of last year. 

The markets regulator said rising activity in derivatives to a deepening of investor participation especially with the roll out of futures contracts in June, which are now tied to six firms including Safaricom and lenders KCB Group and Equity Group.

Meanwhile, the quarter under focus saw total assets under management (AUM) by Collective Investment Schemes go up by 13 percent to KSh 851.7 billion as at the end of March 2026, driven by growth in existing funds and intensified marketing efforts by fund managers.

However, the market experienced a dip in foreign investor participation, which fell to 25.58 percent, a 6.69 percentage point decrease from the 32.27 percent recorded in Q1, as the market recorded net foreign portfolio outflows of KSh 1.2 billion. 

This marks a significant improvement from the KSh8.78 billion outflow recorded in the previous quarter.

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