Nairobi Securities Exchange Investors Suffer Sh344 Billion Valuation Decline as Middle East Tensions Fuel Foreign Exit

Nairobi Securities Exchange market cap falls to Sh3.2 trillion. Discover how the Middle East war and foreign investor flight triggered a 10.5% index decline.

By: AXL Media

Published: Apr 6, 2026, 10:22 AM EDT

Source: Information for this report was sourced from The Star

Geopolitical Instability Triggers Massive Valuation Erosion

Investors at the Nairobi Securities Exchange experienced a staggering Sh343.6 billion decline in paper wealth during March, a downturn largely fueled by the ongoing conflict in the Middle East. Market analysis reveals a broad based retreat, with every primary index falling between 8.5 and 10.5 percent throughout the month. This volatility was particularly acute during the final two weeks of March, which saw over Sh230 billion in value erased across just five consecutive trading sessions, marking the bourse's most challenging period in 19 months.

Foreign Capital Flight Dominates Market Sentiment

The month was characterized by a persistent exodus of international investors, resulting in Sh4.3 billion in net outflows. Trading records indicate that foreign entities were net sellers in 17 out of 22 sessions, with total sales reaching Sh8.61 billion against purchases of only Sh4.3 billion. This sustained withdrawal significantly impacted market capitalization, which plummeted from Sh3.5 trillion in February to Sh3.2 trillion by the end of March, highlighting the sensitivity of the local exchange to global geopolitical shifts and risk aversion.

Banking Sector Resilience Undermined by Pricing Pressure

Despite reporting robust earnings and improved dividend payouts, the banking index suffered an 8.8 percent decline. Major financial institutions saw their share prices retreat significantly, with KCB losing 15.6 percent and Equity dropping 10.7 percent. ABSA and Standard Chartered followed suit with declines of 11.3 percent and 8.83 percent respectively. In contrast, Co-op Bank emerged as a rare outlier, maintaining gains while its historical dividend valuations have reportedly tripled since its initial listing in 2008.