Equities Trend Ups Pushing Turnover to Over 133 Percent Increase

For the past week, the equities market registered an upward trend where NASI and NSE 25 gaining by 1.4 percent, and 1.6 percent respectively.

The NSE 20, on the other, remained flat. The YTD performance, as a result, for NASI, NSE 20 and NSE 25 reported declines of 14.5, 24.4 and 16.2 percent, respectively.

The week’s performance was driven by gains in large-cap counters such as KCB Group, Safaricom, Barclays Bank of Kenya, and NIC, which gained by 4.1, 3.3, 1.4, and 1.0 percent respectively.

Over the past twelve months (LTM), NASI, NSE 20 and NSE 25 have declined by 5.6, 20.8, and 8.5 percent, respectively.

Equities turnover increased by 133.9 percent to 26.5 million US Dollars from 11.3 million dollars the previous week, bringing the YTD turnover to 1.5 billion dollars.

Foreign investors remained net sellers, with net weekly outflows increasing by 83.9 percent to 12.9 million dollars, from 7.0 million dollars in the previous week.

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 11.9x, which is 13.0 percent below the historical average of 13.5x, and a dividend yield of 4.9 percent. This is higher than the historical average of 3.7 percent.

The current P/E valuation of 11.9x is 21.5 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 43.5 percent above the previous trough valuation of 8.3x experienced in December 2011.