Market Turnover Clocks 19.5 Million as Equities Record Inconsistency

The equities market during the past one week recorded inconsistent results NSE 20 and NASI declined by 0.9 and 1.4 percent, respectively. NSE 25, on the other hand, gained by 0.4 percent.

The trend pushed the YTD performance to the declines of 24.4, 15.4, and 14.5 percent, for NSE 20, NASI and NSE 25, respectively.

NASI’s decline was driven by drops in large-cap stocks such as British American Tobacco (BAT) and Safaricom, which declined by 6.8 and 2.1 percent, respectively.

Equities turnover increased by 82.4percent during the week to 19.5 million US Dollars from 10.7 million dollars the previous week, taking the YTD turnover to 1.7 billion dollars.

Foreign investors remained net sellers for the week, with a net selling position of 0.7 million dollars, a 121.3 percent increase from last week’s net selling position of 0.3 million dollars.

“We expect the market 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 of the US Dollar,” stated Cytonn Investments weekly report.

The market is currently trading at a price to earnings ratio (P/E) of 10.4x, 22.6 percent below the historical average of 13.4x, and a dividend yield of 4.9 percent, above the historical average of 3.8percent.

The current P/E valuation of 10.4x is 6.1 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 25.2 percent above the previous trough valuation of 8.3x experienced in December 2011.