During the week, the equities market was on an upward trend with NASI gaining 1 percent, NSE 20 0.6 percent, and NSE 25 gaining 0.1 percent taking their YTD performance to 2.0 percent, 10.1 percent, and 3.0 percent respectively.
The week’s performance was driven by gains in large-cap stocks such as Safaricom, BAT and Bamburi Cement that gained by 2.7 percent, 1.3 percent, and 0.6 percent, respectively.
For the last twelve months (LTM), NASI, NSE 20 and NSE 25 have gained 5.1 percent, 17.5 percent, and 2.1 percent respectively.
Equities turnover increased by 55.6 percent to 26.9 million US dollars, from 17.3 million US dollars the previous week. The increase takes the YTD turnover to 1.2 billion dollars.
Foreign investors remained net sellers, with a net foreign outflow of 5.5 million US dollars during the week. On a YTD basis, foreign investors have remained net sellers, recording a net outflow of 194.2 million US dollars as they exit the market at relatively expensive valuations to realize capital gains earned from the bullish rally witnessed from Q2’2017 to March 2018, for possible re-entry at cheaper valuations.
The expectation is that the market will 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 13.9x, which is 3.0 percent above the historical average of 13.5x, and a dividend yield of 3.9percent, higher than the historical average of 3.7 percent.
The current P/E valuation of 13.9x is 41.8 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 67.5 percent above the previous trough valuation of 8.3x experienced in December 2011.