In 2018, the Kenyan equities market hit a downward trend, with NASI, NSE 25 and NSE 20 declining by 18., 17.1 and 23.7 percent, respectively.
Since the peak in February 2015, NASI and NSE 20 are down 20.9 percent and 48.4 percent, respectively.
The only large cap gainer during the year was Barclays Bank, which gained 14.1 percent, while the largest losers were East Africa Breweries (EABL), Bamburi Cement, Diamond Trust Bank (DTB), NIC Group and Safaricom, which lost 26.6 percent, 26.4 percent, 18.5 percent, 17.6 percent, and 17.0 percent during the year, respectively.
Key to note is that Safaricom continues to be a key part of Kenyan equities portfolios, accounting for 42.4 percent of Nairobi Stock Exchange (NSE’s) market capitalization, and has dominated on both the market turnover and in determining the direction of the market given its weight and liquidity in the Nairobi Securities Exchange.
Equity turnover during the year rose by 2.3 percent to 1,723.8 million US dollars from 1,684.4 million dollars in FY’2017. Foreign investors turned net sellers with a net outflow of USD 425.6 million compared to net outflows of USD 113.7 million recorded in FY’2017.
The foreign investor outflows during the year can be attributed to negative investor sentiment, as international investors exited 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 10.7x, 19.9 percent below the historical average of 13.4x, and a dividend yield of 5.2 percent, above the historical average of 3.8 percent.
The current P/E valuation of 11.0x is 9.6 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 29.2 percent above the previous trough valuation of 8.3x experienced in December 2011.