Equities Market Drops for the Week as Turnover Falls to 11.3 Million Dollars

The equities market performance in the past week realized a falling trend with the stock market and the all share index declining. NASI, NSE 20 and NSE 25 dropped by 4.4, 2.0 and 4.3 percent, respectively.

The YTD performance subsequently declined by 15.7, 24.4 and 17.5 percent, for NASI, NSE 20, and NSE 25 in that order.

The week’s performance was driven by declines in large-cap counters with percentage declines in companies such as Safaricom that dropped by 7.1, Equity Group by 6.2, KCB Group by 5.2, Barclays Bank of Kenya by 2.8, and Standard Chartered Bank by 2.1 percent.

The last twelve months have seen (LTM), NASI, NSE 20 and NSE 25 decline by 9.3, 22.9 and 11.9 percent, respectively.

Equities turnover decreased by 66.7 percent to 11.3 million US Dollars from 34.0 million the previous week. This brought the YTD turnover to 1.5 billion dollars.

Foreign investors remained net sellers, with net weekly outflows decreasing by 12.5 percent to 7.0 million dollars, from 8.0 million dollars previously.

According to Cytonn Investments, 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 12.8 percent below the historical average of 13.5x, and a dividend yield of 5.0 percent that is higher than the historical average of 3.7 percent.

The current P/E valuation of 11.7x is 19.8 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 41.3 percent above the previous trough valuation of 8.3x experienced in December 2011.