Corporate governance: The engine powering NSE’s wealth boom

Secondly, liquidity has increased significantly. Fixed income issues that come onto the market, both corporate and sovereign, are often oversubscribed. A lot of liquidity chasing after the same set of investing opportunities tends to drive up valuations. 

Other factors include lower inflation and increasing interest in capital markets as a growing industry of financial literacy gurus and influencers teach young people investing skills.

However, these factors alone don’t explain why certain stocks are leading the rally. The differentiating factor has been a shift in corporate governance and communication.

Trust, built through timely disclosure and coherent messaging, is becoming a key driver at the NSE.

Investors with increasing access to cheap capital often flock to firms known for good corporate governance and proactive communication.

When investors buy shares, they’re trusting their broker to handle the trade properly. As shareholders, they trust auditors, boards of directors, other insiders, and regulators to play their roles with integrity.

In short, capital markets, like most large-scale social innovations, are founded on trust. Trust, in turn, is largely based on communicating timely, relevant information.

This reduces information asymmetry, increases liquidity, and narrows bid-ask spreads. Studies also show that companies with coherent messaging and active investor relations command valuation premiums over comparable peers.

Equities with the highest turnovers have tended to be in the banking and telecommunication sectors. Company management in these sectors make extraordinary efforts to cultivate visibility and anchor investor expectations through regular meetings and granular updates.
Other companies are making efforts to increase engagement with investors.

For example, KenGen recently made changes to its governance framework, noting in a press release that "strong governance lowers risk premiums". Kenya Re made broadly similar changes. Both companies have seen elevated turnovers.

Sasini offers another example of swift market reaction to information. In its 2025 annual report, Sasini shared plans to sell assets with a carrying amount of Sh3.8 billion at a sale price of Sh7.9 billion. The assets on sale account for about 15 percent of group assets. At the time of the announcement, Sasini’s market capitalisation stood at Sh4.6 billion. 

This extraordinary situation, as well as management’s stated intention to restructure the group and enhance shareholder value, sparked renewed interest in the stock. Since the information’s release, the stock has seen turnover skyrocket to record levels.

The rally, therefore, has revealed an important point: the bull-run may be macro-driven, but enduring winners are companies with good corporate governance and a great equity story telegraphed in frequent investor touchpoints.

On the other hand, disjointed or contradicting messaging that is unmoored from the firm’s equity story can severely dent management’s credibility.

The writer is an independent equity analyst. | X @KiiruKigunda