By Benadeta Mwaura - Reporter
Kenya, July 6, 2026 - Foreign investors at the Nairobi Securities Exchange (NSE) earned an 18.8% return in US dollar terms during the first half of 2026, supported by a stable Kenyan shilling and a strong rally in blue-chip stocks, reinforcing the market's position as one of Africa's best-performing exchanges.
According to data from the Morgan Stanley Capital International (MSCI) Frontier and Emerging Markets indices, the NSE's performance accelerated in the second quarter after share prices of major listed companies, including Safaricom, Equity Group, KCB Group, Co-operative Bank, East African Breweries (EABL), and Standard Chartered Bank Kenya, posted strong gains.
The stable exchange rate also protected foreign investors from currency losses, allowing dollar-denominated returns to closely match gains recorded in the local currency.
In Kenya shilling terms, investor wealth on the NSE expanded by 27.8%, equivalent to approximately KSh817.2 billion, pushing the total market capitalisation to a record KSh3.76 trillion as of June 30. The growth was partly driven by the listing of Kenya Pipeline Company (KPC) in March and Family Bank in June, which together added about KSh212.2 billion in new market value.
Excluding the two new listings, the market would still have recorded a robust 20.5% gain, equivalent to about KSh605 billion, highlighting the strong performance of existing listed companies. The rally has largely been fuelled by banking stocks and Safaricom, which have attracted increased interest from both local and international investors.
The MSCI indices, which are closely followed by global fund managers, currently track 17 Kenyan companies across the Frontier Markets and Frontier Small Cap indices. Inclusion in the benchmark gives listed firms greater visibility among international investors and often boosts liquidity and price discovery.
Among the Kenyan companies featured in the MSCI Frontier Markets Index are Safaricom, Equity Group, KCB Group, Co-operative Bank of Kenya, East African Breweries (EABL) and Standard Chartered Bank Kenya, while firms such as KenGen, Kenya Re, Kenya Power, DTB Group, Carbacid Investments, Centum Investment Company, CIC Insurance Group and HF Group are included in the Frontier Small Cap Index.
Despite the impressive performance, Kenya ranked sixth among the African markets tracked by MSCI in dollar returns during the first half of the year. Nigeria led the continent with returns of 56.1%, followed by Zimbabwe at 48%, Tunisia at 42.3%, South Africa at 23.5%, and Côte d'Ivoire at 21.3%. Kenya's 18.8% return placed it ahead of Senegal, while Egypt, Morocco and Mauritius posted negative dollar returns over the same period.
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Kenya's resilience has been attributed to improving macroeconomic fundamentals, including a relatively stable shilling, easing inflation and growing investor confidence in listed financial institutions.
Banking stocks have been among the biggest drivers of the rally, supported by strong earnings, improved dividend expectations and lower interest rates, while Safaricom has continued to benefit from optimism surrounding its digital services and telecommunications business.
The latest performance builds on the NSE's strong showing in 2025, when it ranked as the second-best-performing African stock market in dollar terms, delivering returns of 52.2% to foreign investors.
Market analysts say if macroeconomic stability persists and corporate earnings remain strong, the Nairobi bourse could continue attracting both foreign portfolio inflows and domestic institutional investors during the second half of the year.