The equities market was on a downward trend last week with NASI, NSE 20 and NSE 25 declining by 8.0 percent, 5.4 percent, and 8.4 percent, respectively, taking their YTD performance to declines of 15.0 percent, 23.7 percent, and 15.9 percent, respectively.
This week’s performance was driven by declines in large-cap counters such as Co-operative Bank, Equity Group, Safaricom, Bamburi Cement, and KCB Group that declined by 14.0 percent, 10.9 percent, 9.4 percent, 8.6 percent, and 8.0 percent, respectively.
For the last twelve months (LTM), NASI, NSE 20 and NSE 25 have declined by 12.4 percent, 25.0 percent, and 15.9 percent, respectively.
Equities turnover increased by 4.5 percent to 27.2 million US dollars from 26.0 million dollars the previous week, bringing the YTD turnover to 1.4 billion dollars.
Foreign investors remained net sellers, with net weekly outflows increasing by 99.2 percent to 8.1 million dollars from 4.1 million previously.
According to Cytonn, the market is likely to remain subdued in the near-term as international investors exit the broader emerging markets due to the expectation of rising US interest rates coupled with the strengthening US dollar.
The market is currently trading at a price to earnings ratio (P/E) of 11.7x, which is 13.3 percent below the historical average of 13.5x, and a dividend yield of 4.9 percent, higher than the historical average of 3.7 percent.
The current P/E valuation of 11.7x is 19.4 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 41.0 percent above the previous trough valuation of 8.3x experienced in December 2011.