NAIROBI, June 17, 2025 – East African stock markets are grappling with heightened global economic uncertainty as fears of a potential stock market crash loom large in 2025. Despite a resilient regional capital market, investors in Kenya, Tanzania, Uganda, and Rwanda are bracing for turbulence driven by geopolitical tensions, U.S. trade policies, and local economic challenges.
The Nairobi Securities Exchange (NSE), the largest and most active stock market in East Africa, has been a focal point for investors. With 62 listed companies and a market capitalization of KSh 2.3 trillion, the NSE remains the region’s economic bellwether. However, recent global market jitters have sparked concerns. The NSE All-Share Index (NSE-ASL) recorded a modest 0.73% weekly gain in early June, pushing its year-to-date performance to 9.68%. Yet, analysts warn that external shocks could disrupt this momentum. “Global cues, particularly U.S. tariff threats and Middle East tensions, are creating risk aversion,” said Jane Mwangi, a financial analyst at KCB Capital.
The Dar es Salaam Stock Exchange (DSE) and Uganda Securities Exchange (USE) have also shown resilience but face similar pressures. The DSE, with a growing number of cross-listed firms, benefits from Tanzania’s stable economic outlook, projected to grow at 5.8% in 2025. Meanwhile, the USE, though smaller, has seen steady interest in local bonds. The newly launched East Africa Exchanges (EAE) 20 Share Index by the East African Securities Exchanges Association (EASEA) aims to boost visibility for the region’s top firms, fostering cross-border investments. However, its success hinges on global stability.
Global markets have been rattled by U.S. President Donald Trump’s “Liberation Day” tariffs announced in April, which triggered a 20% drop in U.S. markets earlier this year. The S&P 500 has since recovered, sitting just 1.6% below its record high, but renewed tariff threats and Middle East conflicts have kept investors on edge. A Reuters report noted that rising oil prices, spurred by U.S. personnel movements in the Middle East, could further strain emerging markets like East Africa, which rely heavily on imported fuel.
In South Africa, the continent’s largest equity market, foreign investors have withdrawn $3.7 billion since October, reflecting global risk aversion. This outflow has weakened the rand and raised bond yields, signaling caution that could spill over into East Africa. “When South Africa sneezes, East Africa catches a cold,” said Peter Njoroge, a portfolio manager in Nairobi, highlighting the interconnectedness of African markets.
Locally, East African economies face unique challenges. Kenya’s shilling strengthened slightly against the dollar in June, but inflation remains a concern. Tanzania’s 2025 economic survey, presented on June 12, projects steady growth, while Kenya, Uganda, and Rwanda’s finance ministers outlined ambitious 2025/26 budgets to bolster infrastructure and services. However, high public debt and reliance on external financing could amplify vulnerabilities if global markets crash.
Investors are also monitoring corporate developments. Safaricom, a heavyweight on the NSE, has sustained investor confidence with strong digital and financial services growth. In contrast, regional banks like Equity Group have faced headwinds from rising interest rates. “Local fundamentals are solid, but global volatility could override them,” Mwangi noted.
As fears of a 2025 crash persist, East African investors are urged to diversify portfolios and focus on value stocks. “The region’s markets have weathered storms before,” said Njoroge. “But preparation is key.” With global risks mounting, East Africa’s financial hubs are holding steady—for now.
