Last week, the equities market realized a falling trend with NASI, NSE 20 and NSE 25 declining by 3.4 percent, 3.4 percent, and 3.0 percent, respectively, taking their YTD performance to declines of 7.6 percent, 19.4 percent, and 8.2 percent, respectively.
The week’s performance was driven by declines in large-cap stocks such as Bamburi Cement, Barclays Bank of Kenya, Diamond Trust Bank and Safaricom that declined by 9.4 percent, 7.7 percent, 3.7 percent, and 3.6 percent, respectively.
For the past twelve months (LTM), NASI, NSE 20 and NSE 25 have declined by 3.9 percent, 21.5 percent, and 5.8 percent, respectively.
On the other hand, the equities turnover rose by 6.4 percent to 26.0 million US dollars from 24.5 million dollars the previous week. Foreign investors remained net sellers, with net sales of 4.1 million.
According to Cytonn, the market is likely to remain supported by positive investor sentiment this year, as investors take advantage of the current attractive stock valuations in select counters.
The market is currently trading at a price to earnings ratio (P/E) of 12.7x, which is 5.9 percent below the historical average of 13.5x, and a dividend yield of 4.5 percent, higher than the historical average of 3.7 percent.
The current P/E valuation of 12.7x is 29.6 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 53.0 percent above the previous trough valuation of 8.3x experienced in December 2011.