ICEA LION Asset Management Releases Q3 2025 Investor Pulse

• ICEA LION Asset Management Releases Q3 2025 Investor Pulse:Local markets outperform global markets

ICEA LION Asset Management, East Africa’s pioneering investment management firm, has released the Second Quarter 2025 edition of the ILAM Investor Pulse under the theme “Local markets outdo global markets.”

Speaking during the launch, Esther Muchai, Senior Portfolio Manager at ICEA LION Asset Management, shared key market insights, highlighting the impact of ongoing global events and the outlook for Kenya’s economy.

Highlights from the Q3 2025 ILAM Investor Pulse:

• 2025 Global economic growth projections remain subdued as uncertainty persists into the 3^rdquarter

Global growth forecasts have been adjusted downwards as uncertainty scales to higher levels due to trade policy uncertainty and persistent geopolitical tensions around the world.

Global headline inflation is expected to decline at a slower pace than previously projected affecting policy rate changes globally.

We are likely to witness global market structural changes in the long-term emanating from geopolitical realignments and trade policy shifts.

• Global financial markets characterised by volatility

The global financial markets’ performance seems to have recovered from the big market shocks in the first quarter of the year. Although significant uncertainty remains, the extension and pause in tariff implementation offers investors some relief and are better placed in pricing in the near-term risks.

• Stronger local economic performance

Social unrest and weak private sector credit expansion could hinder economic growth for 2025. The Central Bank of Kenya projects a higher GDP growth in 2025 compared to last year, driven by the expected recovery in growth of credit to the private sector, and improved exports, among other factors.

The macro-economic environment has remained supportive with anchored inflationary pressures and currency stability.

• Stellar stock market driven by higher demand

The Nairobi Securities Exchange (NSE) performance has remained strong with attractive valuations.Foreign and local demand has remarkably improved this year due to currency stability and lower fixed income returns.

During the same event, ICEA LION Asset Management also released the Q2 2025 ILAM Consumer Spending Index, which tracks consumer spending as an indicator of real economy trends.

The index draws data from interviews with approximately 1,200 consumers and over 200 retail businesses across major urban centres in Kenya.

Judd Murigi, Head of Research at ICEA LION Asset Management, presented key findings from the index:

Highlights from the Q2 2025 ILAM Consumer Spending Index:

• Individual spending trends peak on higher prices

For the first time since the index’s inception in 2023, a higher proportion (85%) of consumers indicated that they had spent more in the quarter compared to the similar quarter last year.The increased spending was attributed primarily to higher prices of items purchased

• Incomes at the highest levels since the index launch

40% of individuals surveyed had stagnant income levels over the past 12 months, while 27% reported higher incomes and 30% saw their incomes decline between the second quarter of 2024 and the second quarter of 2025

Over half of respondents in Eldoret saw their income rise, the highest of urban centres surveyed, while Nyeri and Kisumu had the highest proportion of respondents who experienced lower incomes compared to the same period in 2024.

In terms of income categories, the lower income and lower middle income categories had the highest proportion of declined incomes over the past 12 months

In terms of economic sectors, the education, training and transport and logistics has the highest proportion of workers reporting higher incomes, while those engaged in the trade sector had the highest proportion of reduced incomes since the second quarter of 2024

• SACCOs being the preferred investment option

A majority of respondents continue to prefer investing in SACCOs, banks and chamas respectively. Financial market instruments such as unit trusts and shares lagged in terms of investment preference.

Investors were mainly driven by returns, practicality, and safety of investment options.

• Retail sales trends remain broadly consistent

Over half of retail businesses reported higher sales in Q1 2025 compared to Q1 2024, while 46% experienced lower sales.  This was however, a deterioration from the previous two quarters when almost 60% of retail businesses reported improved sales.

For the second quarter in a row, sales increases were mainly attributed to more customers, rather than price hikes.

Businesses reporting lower sales attributed the trend to higher operating costs.

In terms of sectors, apparel and food and beverage outlets had the most improved sales trends compared to the same period in 2024.

Mombasa and Nairobi had the highest proportion of retail businesses recording higher sales during the quarter, while Nakuru and Nyeri had the highest proportion of businesses with lower sales

• ILAM Consumer Spending Index falls slightly

The index rose by 2% compared to Q1 2025 with higher individual spending trends offsetting lower retail sales trends.

In his closing remarks, ICEA LION Asset Management CEO Einstein Kihanda, who is also the immediate former Chairman of the Institute of Certified Investment and Financial Analysts (ICIFA), noted:

“Local markets continue to offer better risk-return dynamics in 2025 compared to global markets”