There is a particular kind of optimism that only January can produce: a mix of “New Year, New Me” energy and the cold reality of school fees. Yet, as I sat watching the ticker at the NSE last month, I couldn’t help but notice that the market was having a much better time than the average commuter on Ngong Road. In this month’s overview, we dive into the numbers that defined our January, the quiet shifts in the bond markets, and what the horizon of February holds for the Kenyan investor.
1. The NSE: A Tale of Two Tiers
January 2026 proved that while the “January Blues” might affect our pockets, they don’t necessarily dampen the Nairobi Securities Exchange (NSE). The market opened on a firm footing, driven by a renewed appetite for banking and utility stocks.
- Top Performers: Unexpectedly, Kenya Airways led the charge with a staggering 36.83% monthly gain, followed by Uchumi Supermarket at 23.30%.
- The Banking Anchor: The Banking Index rose by 5.59%, with NCBA becoming a focal point following Nedbank’s interest in a controlling stake. Co-operative Bank and Diamond Trust Bank also posted solid double-digit advances.
- The Big Exit: Foreign investors turned net sellers to the tune of KSh 1.09 billion, leaving domestic investors to carry the momentum higher.
2. Money Market Funds (MMFs) & The Search for Yield
For the everyday saver, the MMF landscape is shifting. With inflation easing to around 4.4% in January, interest rates on short-term instruments have begun a slow descent.
| Fund Manager | Average Gross Return (Jan ’26) | Net Return (Approx.) |
| Arvocap Money Market Fund | 11.40% | 9.69% |
| Etica Money Market Fund | 10.0% | 8.50% |
| Cytonn Money Market Fund | 10.0% | 8.50% |
| Sanlam USD MMF | 5.66% | 4.81% |
Interestingly, we’ve crossed a massive milestone: Kenyan fund managers now oversee more than KES 600 billion in assets. New players like Swala Capital are making waves by lowering the barrier to entry for retail investors.
3. Special Funds & The Bond “Switch”
The most “intellectual” move of the month happened behind the scenes at the National Treasury. To manage the looming debt of 2026, the government executed a bond switch, deferring KSh 25 billion in debt to 2037. It’s a sophisticated way of saying, “We’ll pay you later, but with better terms for your patience.”
On the innovation front, Lofty-Corban launched East Africa’s first Private Debt Special Fund. This fund targets a Ksh 2.4 trillion credit gap, offering investors a way to earn from corporate lending outside the volatile stock market.
The Controversy: The “Secret” Eye of the KRA
It wouldn’t be Kenya without a bit of friction. The proposed Finance Bill 2025/2026 has raised alarms, particularly a clause that might grant the KRA automatic access to citizens’ personal data and trade secrets. Manufacturers warn this could “cripple” the industry’s competitiveness, creating a tense atmosphere as we head into the new budget cycle.
Outlook for February: The Road Ahead
As we move into February, the narrative shifts toward privatization and budgetary policy.
- The KPC IPO: The landmark Kenya Pipeline Company (KPC) IPO is the talk of the town. With the government offloading a 65% stake, it represents the largest privatization in our history, priced accessibly at KES 9.00 per share.
- The Budget Policy Statement (BPS): Expect the National Treasury to submit the BPS to Parliament by February 15th. This will outline the spending ceilings for the next financial year and give us a clearer picture of the tax man’s next move.
- Yield Curve Normalization: Analysts expect the CBK to continue rejecting high-priced bids in auctions, forcing yields downward and making long-term bonds more attractive for those looking to “lock in” double-digit returns.
Closing Thoughts
January was about stabilization. February is about positioning. Whether you’re queuing for the KPC IPO or watching the bond yields, the Kenyan market is proving that even in a high-debt environment, innovation doesn’t sleep.
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