Paul John's side bowed at the Bowl semi-final stage in the Wellington Sevens.
Wales bowed out of a disappointing Herts Sevens tournament in New Zealand when Kenya dumped them out of the Bowl at the semi-final stage.
Paul John's men picked up five points from the tournament to slip down the overall rankings one place to eighth while New Zealand top the table on 73 points after beating closest rivals Fiji 24-7 to retain their Wellington title and take an outright lead in the HSBC Sevens World Series after four of nine rounds.
Having been knocked out of the main draw on day one, Wales were hopeful of a successful Bowl campaign on day two.
Wales edged a tense quarter final against United States with tries by Matthew Pewtner and Kristian Phillips securing passage to the semi finals with a 10-0 victory.
But Kenya, who are slowly getting back to the type of form which made them such dangerous opponents a couple of years ago, brushed Wales aside 17-7 in the semi-final to end any hopes of silverware for the men in red.
Kenya scored two tries in the first half through Sidney Ashioya and Leon Adonga with Nato Linus Simiyu adding a conversion to put the Africans firmly in control at 12-0.
Wales battled back in the second half with Pewtner racing over with Alex Walker adding the extras. With Wales slowly but surely getting back into the game, Kenya took the sting out of the comeback with Simiyu knocking over a penalty to guide Kenya to a 17-7 win.
The Kenyans went on to win the Bowl final against Australia to claim their biggest haul of points in the series so far (8) while Wales were left to lick their wounds as they focus on the next leg in Las Vegas next week.
Wales and Ospreys back row James King, who came through the North Wales age grade system, nominated North Wales Regional Community Rugby Manager Marc Roberts, in the WRU's 'Diolch' initiative where squad players thanked those who played a part in their rise to the top.
Beating Merthyr has boosted Carmarthen Quins hopes of reaching a top eight spot in the Principality Premiership. Quins captain Haydn Pugh is delighted with his team's progress and is determined that everyone from the Under 6s through to the senior team, enjoys the ride.
When the Wales squad were asked to nominate individuals who played a big part in their early playing days, Wales and Dragons full back and wing Hallam Amos thought of his former Monmouth School rugby coach John Bevan.
Sam Cross and Luke Treharne have been named as co-captains of the Wales Sevens side as head coach Gareth Williams names his 12-man squad to play in the first leg of the HSBC World Series in Dubai next weekend.
Bedwas head coach Steve Law and players Nicky Griffiths and Alun Rees extol the virtues of the close knit club as they prepare to host third place RGC 1404 - who are one place head of them on the Principality Premiership points table - on Saturday.
Many of the Wales squad have said Diolch (thank you) to someone who played an important part in their early playing days by nominating them to be invited to the Wales v South Africa match. One person, Gowerton Comprehensive geography teacher Mr Dean Mason was nominated by two of his former pupils, Dan Biggar and Sam Davies.
The second WRU disability rugby pilot has been delivered, this time in Caerphilly schools, culminating in a festival at the Caerphilly Centre of Sporting Excellence, Ystrad Mynach tomorrow. Plans are in place to set up a Disability Rugby Club in Newbridge to provide long-term playing opportunities.
WRU TV: Hear from inside the Wales camp as Neil Jenkins discusses this weekend's clash with South Africa and how the squad are looking to put in a strong performance to round of the 2016 Under Armour Series