The equities market during the past week saw NASI, NSE 25, and NSE 20 register a downward trend contrary to the hopes of stock traders.
The performance for the three declines by 2.0, 1.6, and 0.5 percent, respectively, taking their YTD performance to 11.9, 12.7 and 7.5 percent, for NASI, NSE 25, and NSE 20, respectively.
NASI’s decline was attributed to declines in large-cap banking stocks such as Barclays Bank, Cooperative Bank, and Standard Chartered Bank, which dropped by 3.7, 2.8, and 1.1 percent, respectively.
Equities turnover declined by 50.3 percent during the week to 29.7 million US dollars, from 59.7 million dollars the previous week, taking the YTD turnover to 246.5 million dollars.
Foreign investors turned net buyers for the week, with a net buying position of 1.1 million dollars, from last week’s net selling position of 3.6 million dollars.
The market is currently trading at a price to earnings ratio (P/E) of 12.6x, 6.3 percent below the historical average of 13.4x, and a dividend yield of 4.6 percent, above the historical average of 3.8 percent.
With the market trading at valuations below the historical average, Cytonn Investments believes there is value in the market.
The current P/E valuation of 12.6x is 29.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 51.4 percent above the previous trough valuation of 8.3x experienced in December 2011.