Small and medium-sized stocks have cut the dominance of the five largest firms at the Nairobi bourse amid a rally in share prices and fresh listings of Kenya Pipeline Company (KPC) and Family Bank.
Safaricom, Equity Group, KCB Group, EABL and Co-operative Bank of Kenya now account for 62 percent of the Sh3.991 trillion investor wealth at the Nairobi Securities Exchange (NSE), down from 66 percent at the beginning of the year.
At peak of their dominance in 2021, the top five firms accounted for 81 percent of the NSE’s market capitalisation, the measure of investor wealth.
This pointed to heightened concentration of risk in the market as investors opted to put most of their eggs in a few baskets as opposed to spreading risk across the 65 counters.
Concentration risk refers to the likelihood of investors losing money as a result of having a large portion of their holdings in a particular investment, asset class or a given stock relative to their overall portfolio.
Now, companies such as Stanbic Holdings, DTB, I&M Group, Absa Bank Kenya and Kenya Power have clawed back market share following a surge in their share prices, which rose faster compared to the top five firms over the past year.
Stanbic and DTB have seen their valuations grow by 47 percent and 33 percent to Sh115.3 billion and Sh42.6 billion in the six months.
Absa Bank Kenya has added 35 percent to Sh180.9 billion, while I&M Group’s valuation has jumped by 60 percent to Sh117.9 billion.
Notable gains have also been seen on Kenya Power and BAT Kenya, whose valuations are up 54 percent and 24 percent this year to Sh40.9 billion and Sh56.9 billion, respectively.
On the small stocks, Car & General has recorded the biggest jump in valuation this year at 207 percent to Sh12.6 billion.
This has improved wealth distribution at the bourse, especially to local retail investors who have seen their holdings in the mid and small cap counters appreciate after a prolonged bear run.
It reflects growing appetite by investors of placing their hopes on a wider number of counters, including the fresh listings.
The dominance of the five firms had made it difficult for investors to measure the true performance of the bourse due to the companies’ outsized influence on key market indicators.
The NSE had two significant listings of KPC and Family Bank in 2026, which added a combined Sh217.7 billion in new investor wealth to the bourse.
KPC’s valuation stands at Sh165.38 billion, while Family Bank has a market cap of Sh52.3 billion.
The NSE has now added Sh1.47 trillion in investor wealth over the past year, beating asset classes like bonds, cash deposits and property on returns.
A 14-year listing drought at the NSE between 2011 and 2025 was identified as one of the causes of the market concentration in a select group of blue chips that were seen to offer steady dividends, making them attractive to high-net-worth and foreign investors.
The Capital Markets Authority (CMA) has been highlighting market concentration as one of the NSE’s main risks, saying that adverse performance or failure of the top firms would have a disproportional impact on overall market stability.
“This has underscored the need for continued efforts to deepen the market, enhance and encourage investor profile diversification, and support the growth and visibility of smaller and mid-cap issuers,” the CMA said in its latest market soundness report.
“The authority continues to promote investor portfolio diversification and initiatives aimed at broadening market participation, with a view to encouraging listings across a wider range of companies and enhancing overall market resilience.”
As more investors come into the market, a wider range of stocks have recorded double-digit percentage gains, cutting across sectors such as banking, manufacturing and energy.
Since the beginning of the year, Co-operative Bank of Kenya has been the leading gainer this year among the top five stocks at 46 percent to Sh34.85 per share, adding Sh64 billion to its valuation.
Equity has added 30 percent or Sh75.5 billion in valuation to Sh327.4 billion, while KCB is up 31 percent or Sh65 billion to Sh276.4 billion.
Safaricom has added Sh326.5 billion to its valuation, equivalent to a gain of 29 percent, valuing the firm at Sh1.46 trillion. EABL has gained the least among the five at 6.4 percent to Sh221.2 billion.
Between 2019 and 2021, Safaricom had a higher market value than the rest of the bourse combined, with its share of investor wealth peaking at 63 percent in May 2021. The company was trading at an all-time high price of Sh43 a share at a time when other stocks were at multi-year lows.
This oversized share of investor wealth meant that any gain or fall in the company’s share price created the impression that the entire market was moving up or down, even though the majority of stocks were largely immobile.
Analysts and the regulator said this was proof of the risk of market concentration on one stock, heightening efforts to bring in new listings to rebalance the market.
Safaricom’s share of investor wealth has now shrunk to 36.6 percent, reflecting the gains made by other firms in the current bullish run that started in 2024.
Among the larger stocks outside of the top five, banks have made some of the biggest gains following increased investor interest in their dividend promise.
Large foreign banks are also actively seeking a share of the local market through equity investment in large lenders, contributing to the price rally.
South Africa’s Nedbank has recently bought a 66 percent stake in NCBA Group for Sh110 billion. Fellow South African lender Absa Group has also bid to increase its stake in its Kenyan subsidiary from 68.5 percent to 85 percent with a share purchase worth Sh30.9 billion.
