Renewed political uncertainty to affect the Kenya Stock Market

The Kenyan stock market witnessed a downward trend last week attributable to losses in select large-cap stocks from KCB Group, Barclays and Equity Group.

The NSE 20, NASI and NSE 25 losing 2.2 percent, 1.8 percent and 0.9 percent, respectively, taking their YTD performance to 19.4 percent, 16.8 percent and 13.8 percent for NASI, NSE 25 and NSE 20, respectively.

The week’s performance is attributable to losses by select large-cap stocks such as KCB Group, Barclays and Equity Group, which lost 7.5 percent, 6.4 percent and 2.7 percent, respectively.

Since the February 2015 peak, the market has lost 10.3 percent and 34.1 percent for NASI and NSE 20, respectively.

Equities turnover increased by 61.7 percent to USD 25.4 mn from USD 15.7 mn the previous week.

Foreign investors turned net sellers with a net outflow of USD 0.3 mn compared to a net inflow of USD 0.2 mn recorded the previous week.

“We expect the market to record subdued activity over the coming few weeks as market players remain cautious of the renewed political uncertainty in the country,” says Cytonn Investments.

“Despite this, we expect the market to remain strong supported by the attractive valuations in select counters and the expected improvement of investor confidence once the country takes to the polls for the presidential elections scheduled for October 26th,” they add.

The market is currently trading at a price to earnings ratio (P/E) of 12.8x, versus a historical average of 13.4x, and a dividend yield of 4.1 percent, compared to a historical average of 3.7 percent.

Source: Cytonn Investments