Equities Post Mixed Reactions Due to Activities at Safaricom and BAT

The equities market recorded mixed performance with NASI and NSE 25 gaining by 0.6 percent and 0.7 percent respectively last week.

During the week, the NSE 20 declined by 3.0 percent taking the YTD performance to 4.7 percent (5.9%) and 5.9 percent for NASI, NSE 20 and NSE 25 respectively.

Last week’s performance of the NASI was due to gains in Safaricom, BAT and Cooperative Bank that gained by 5.4, 2.7 and 1.1 percent respectively.

For the last twelve months (LTM), NASI, NSE 20 and NSE 25 have gained 29.1, 7.7, and 28.1 percent respectively.

Equities turnover declined by 33.1 percent to USD 33.1 million from USD 47.7 million registered 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 on select counters,” said Cytonn Investments in their weekly report.

The market is currently trading at a price to earnings ratio (P/E) of 14.1x, which is 4.4 percent above the historical average of 13.5x, and a dividend yield of 3.7 percent which is similar to the historical average of 3.7 percent.

The current P/E valuation of 14.1x is 45.4 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 69.9 percent above the previous trough valuation of 8.3x experienced in December 2011.