Equities Register Mixed Performances on Gains in Large Cap Stocks

Last week, the equities market recorded mixed performance with NASI and NSE 20 gaining 0.1 percent and 0.2 percent respectively, while NSE 25 remained flat at 0.0 percent taking their YTD performance to 0.7 percent, (10.5%) and 2.0 percent for NASI, NSE 20 and NSE 25, respectively.

The last week’s performance was driven by gains in large-cap stocks such as the BAT, Safaricom, EABL and Diamond Trust Bank (DTB) that gained by 3.3, 2.7, 2.7 and 2.0 percent respectively.

For the last twelve months (LTM), NASI and NSE 25 have gained 8.9 percent and 6.3 percent respectively, while NSE 20 has declined by 11.8 percent.

Equities turnover decreased by 13.2 percent to USD 17.7 million from USD 20.4 million the previous week.

Analysts at Cytonn Investments expect the market to remain supported by positive investor sentiment this year, as investors take advantage of the attractive stock valuations in select counters.

The market is currently trading at a price to earnings ratio (P/E) of 14.2x, which is 5.2 percent above the historical average of 13.5x, and a dividend yield of 3.8 percent slightly higher than the historical average of 3.7 percent.

The current P/E valuation of 14.2x is 44.9 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 71.1 percent above the previous trough valuation of 8.3x experienced in December 2011.