Equities in Focus: NASI and NSE 25 Decline as Markets Register Mixed Performances

The equities market recorded mixed performances with NSE 20 gaining by 0.8 percent while NASI and NSE 25 declined by 1.4 percent and 0.7 percent respectively during the sessions last week

The mixed performance of the three equities took their YTD performance to declines of 24.1, 15.9 and 13.9 percent for NASI, NSE 20 and NSE 25, respectively.

The decline in the NASI was driven by declines in large-cap stocks such as NIC Group, British American Tobacco (BAT), and Co-operative Bank, which declined by 12.6, 7.4, and 2.4 percent respectively.

Equities turnover increased by 127.5 percent during the week to USD 32.4 million from USD 14.2 million the previous week, taking the YTD turnover to USD 1.7 billion.

Foreign investors remained net sellers for the week, with a net selling position of USD 6.4 million, a 129.5 percent increase from last week’s net selling position of USD 2.8 million.

Analysts at Cytonn Investments say that they 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.

The market is currently trading at a price to earnings ratio (P/E) of 10.9x, 18.9 percent below the historical average of 13.4x, and a dividend yield of 5.2 percent, above the historical average of 3.8 percent.

With the market trading at valuations below the historical average, market analysts believe there is value in the market.

The current P/E valuation of 10.9x is 11.0 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 30.9 percent above the previous trough valuation of 8.3x experienced in December 2011.