Equities Closed February on an Upward Trend: What Next For March?

During the month of February, the equities market was on an upward trend with NASI, NSE 20 and NSE 25 rising 0.7, 0.4, and 1.0 percent respectively taking their YTD performance to 5.9, 8.1 and 1.2 percent respectively.

The performance was driven by gains in select large-cap banking stocks namely Co-operative Bank, KCB Group and Barclays Bank, which rose 8.5, 4.4, and 3.8 percent respectively.

For the last twelve months (LTM), NASI, NSE 20 and NSE 25 gained 45.5, 25.3, and 39.8 percent respectively.

For this week, the equities market was on an upward trend with NSE 25, NSE 20 and NASI gaining 1.8, 1.2, and 0.3 percent respectively.

The performance during the week was driven by gains in large caps such as Co-operative Bank, Equity Group and KCB Group, which gained 8.1, 7.6, and 4.9 percent respectively, owing to positive investor sentiment on the expectation of a review of Kenya’s interest rate cap.

Equities turnover decreased by 10.9 percent from USD 197.7 million registered in January to USD 176.1 million in February.

The market is currently trading at a price to earnings ratio (P/E) of 14.8x, which is 10.4 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 14.8x is 52.6% above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 78.3 percent above the previous trough valuation of 8.3x experienced in December 2011.