Equities left investors guessing last week when they exhibited mixed trends throughout the week.
During the week NASI gained 0.3 percent, while NSE 25 and NSE 20 both lost 0.1 percent, taking their YTD performance to 5.6 percent and5.3 percent for NASI and NSE 25 respectively while NSE 20 is flat.
For the last twelve months (LTM), NASI, NSE 25 and NSE 20 have gained 44.6 percent, 38.3 percent, and 27.6 percent respectively.
The week’s performance was attributed to gains by select large-cap stocks such as Barclays Bank and Co-op Bank, which gained 1.9 percent, and 0.6 percent respectively.
Equities turnover increased by 64.2 percent to USD 44.0 million from USD 26.8 million the previous week.
“We expect the market to remain supported by positive investor sentiment this year, as investors take advantage of the attractive stock valuations in select counters,” said analysts from Cytonn Investments Limited.
The market is currently trading at a price to earnings ratio (P/E) of 14.6x, which is 8.6 percent above the historical average of 13.4x, and a dividend yield of 3.7 percent similar to the historical average of 3.7 percent.
The current P/E valuation of 14.6x is 50.2 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 75.3 percent above the previous trough valuation of 8.3x experienced in December 2011.
“In our view, there still exists pockets of value in the market, with the current P/E valuation being 13.9 percent below the most recent peak of 16.9x in February 2015. The charts below indicate the historical P/E and dividend yields of the market,” said the experts from Cytonn.