Capital markets boon: Did global AI, tech hype turbocharge NSE?

While the expected listing of Kenya Pipeline Company (KPC) on the Nairobi Securities Exchange (NSE) next month is happening at an opportune time, according to experts, to this day, there has been no conclusive explanation why the country’s capital markets have been thriving of late.

Sometime last year, during the launch of the KPMG Africa CEOs Outlook report, the genesis of this phenomenon could not be explained explicitly either. However, the chief executives present agreed that this wave should not go unutilised.

“We still cannot figure it out,” said East African Breweries (EABL) Group Chief Executive Jane Karuku during the launch of the report. “Even in terms of NSE market capitalisation, I still have to figure out why the share prices are going up in Kenya, yet there are so many questions around our ecosystem.”

Globally, this has been the case, with hints pointing to a possible stock market burst that business leaders are wary of this year. The excitement in the stock market, globally, has been a result of tech firms driving Artificial Intelligence (AI), which is rubbing off on other listed companies - probably from oblivious retail investors.

In Kenya, market capitalisation hit Sh3 trillion in November last year, a historic high. And capital market proponents have not been quiet since.

 “Market capitalisation in NSE in the last 12 months (to November 2025) has gone up by over Sh1 trillion. That points to investor confidence and money coming back,” argued Capital Markets Authority (CMA) Director Corporate Services Matthew Mukisu at the event.

As such, EABL and Safaricom have taken the opportunity to raise money through corporate bonds. The government is also looking to list State-owned KPC to raise Sh106.3 billion, apart from selling off its 15 per cent stake in Safaricom for Sh244 billion.

But is this growth in market capitalisation a sign of investor confidence, or are there those (investors) who foresee something, hence the need to spread the risk into economies such as Kenya?

NSE Chief Executive Frank Mwiti explains that the boon witnessed in 2025 was not an accident.  “What we saw in 2025 was a rally that was not narrow but broad-based and participatory,” he said during a meeting with the private sector on Monday.

 He argues that the market performed well because of the low interest regime instituted by the Central Bank of Kenya (CBK), which saw returns on Treasury Bills and bonds drop, hence investors sought out other options.

“Investors were not chasing risks; they were replacing opportunities, and so 2025 was a fantastic year,” he said.

 He also pointed out the single share trading product unveiled by the NSE that deepened the market among retail investors.

 “If ever there was a time to risk capital in the NSE, this is it,” said Mr Mwiti. “We have listings that have been oversubscribed. For potential issuers like yourself, this matters because liquidity signals that your capital needs will be met with genuine demand and not forced placements.”

When the same question was posed to Lofty-Corban Investments Ltd Chief Executive Stanley Mutuku, he pointed out that what the capital markets are experiencing is a correction.

“If you look at NSE, we can call it a correction of the market. It has been down for the last maybe 10 years. The last peak was at 6,000 points, then it came down to 1,800 points,” he said.

“It is a correction of what had gone wrong. Of course, there is confidence in the market and we can get good returns.”

Globally, stock markets have been performing well. However, this has been linked to overexcitement by investors in the Artificial Intelligence (AI) and the larger tech space that may have caused a spill over to other sectors or firms listed on the bourse.

This excitement, however, is being perceived as too high with fears of a stock market bubble, which a latest report by Standard Chartered Bank details fears of a bubble burst in the global stock market. The Outlook 2026 report is titled Blowing Bubbles?

The bank’s Global Chief Investment Officer Steve Price notes in the report of discussions of an equity market bubble, led by the boom in AI. However, he says he does not see this excitement growing to the levels that the market experienced in 2007/2008, which led to the global financial crisis.

“Perhaps the closer comparison is the dot.com bubble in the late 1990s,” he says.

He, however, cautions that there are key differences both in terms of the magnitude of investments and expected profits. These investments are also lower compared to the size of the economy.

 “Therefore, we believe there is still some way to go before we get to bubble-like proportions,” he says in the report.

The report states that optimists argue equities remain in a bull market supported by strong AI-driven earnings growth, high credit quality and supportive policies. This is while pessimists argue markets are in a bubble from a valuation standpoint.

“We expect major asset classes to continue to inflate, led by equities, but believe fatter-than-usual tails argue for planning for a wider range of scenarios,” the report says.

A major question in this period is whether a rise in share price would mean actual value. The report discusses this as well with reference to the US stock market.

An article by The Guardian explains the same, noting that the growth in the stock market in the US is more ego-driven to find out which tech giant will dictate the AI market. 

It points out that in 2025, nearly 80 per cent of stock gains were concentrated in seven companies. These are Microsoft, Nvidia, Tesla, Meta, Apple, Alphabet and Amazon.

“That level of concentration should worry us all,” says The Guardian. “Companies are selling the fantasy that AI will replace human workers, even though 95 per cent of AI experiments fail to reach production.”

Standard Chartered opines in the report that whether markets are too expensive or whether valuations are justified by earnings growth remains one of the central debates going into 2026.

“This debate remains disproportionately focused on US equities, and the US technology sector, in particular,” the report says.

This unpredictability leaves investors in a dilemma: how then do you allocate your money in the stock market? Do you pull out, stay put, or is it time to dive in as a newbie?

“It is important to try to scenario plan in your mind,” the report says. “All too often, we see clients increasing risk in their portfolios in good times, only to realise later, after severe losses, that their risk appetite is lower than that implied in their portfolio.”

 The report recommends that if you are fully invested, have a chat with your advisor on how your current portfolio would look when run through a 2000 to 2003 scenario (simulating the dot.com market crash) and a 2007-2009 scenario (simulating the global financial crisis).

 “If those numbers scare you, resist the urge to increase risk exposure at this point and explore different ways to diversify and bring your portfolio to a ‘sleep well’ level,” the report says.

If you are a new investor, then the risk is heightened, and so, you should stop investing and maintain or build a high cash deposit.

The dot.com tragedy of the early 2000s resulted in a market capitalisation loss of Sh221 trillion ($1.7 trillion). This is while the 2008 global financial crisis, which stemmed from poor mortgage valuation, wiped Sh3,250 trillion (USD 25 trillion) in stock market value.

Households lost more than Sh2,600 trillion ($20 trillion) in wealth as almost 10 million homes were repossessed.