Equities Market Flounder as Turnover Dips to $24.5 Million

The equities market last week registered a downward trend with NASI, NSE 20 and NSE 25 declining by 2.3 percent, 3.2 percent, and 2.7 percent, respectively, taking their YTD performance to 4.4 percent, 16.5 percent, and 2.7 percent for NASI, NSE 20 and NSE 25, respectively.

The performance was driven by declines in large-cap stocks such as Safaricom and KCB Group, which declined by 5.2 percent and 5.0 percent, respectively.

Banking sector counters also posted declines, with NIC Group and Equity Group both declining by 1.7 percent, while Diamond Trust Bank and Standard Chartered declined by 1.1 percent and 1.0 percent, respectively.

For the last twelve months (LTM), NASI, NSE 20 and NSE 25 have declined by 3.0 percent, 23.5 percent, and 7.2 percent, respectively.

The equities turnover decreased by 8.6 percent to 24.5 million US dollars, from 26.8 million dollars the previous week, taking the YTD turnover to 1.3 billion dollars.

Foreign investors remained net sellers during the week, with a net selling position of 5.4 million dollars.

According to Cytonn, the market is expected 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 13.2x, which is 2.5 percent below the historical average of 13.5x, and a dividend yield of 4.4 percent, higher than the historical average of 3.7 percent.

The current P/E valuation of 13.2x is 34.3 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 58.6 percent above the previous trough valuation of 8.3x experienced in December 2011.