Equities Record Mixed Performances in February with Turnover Dropping by 12.3%

In February, stock traders were met with mixed performances recorded by equities. NASI gained by 1.5 percent, while NSE 20 and NSE 25 declined by 2.2 percent and 1.5 percent, respectively.

Gains in large-cap stocks such as Safaricom, NIC Group, Standard Chartered Bank Kenya (SCBK), and KCB Group, drove NASI’s improved performance.

Safaricom gained by 9.0 percent, whereas NIC, SCBK, and KCB recorded 6.7, 2.2, and 2.0 percent, respectively.

During the last week of February, the equities recorded a downward trend, with NASI, NSE 20 and NSE 25 declining by 0.9, 2.0 and 1.8 percent, respectively.

This was also largely affected by NIC, Barclays Bank, Diamond Trust Bank Kenya (DTBK) and KCB Group, which declined by 9.8, 2.2, 2.0, and 1.7 percent, respectively.

Equities turnover declined by 12.3 percent during the month to 137.7 million US dollars, from 157.0 million dollars in January 2019.

Foreign investors turned net buyers for the month, with a net buying position of 1.2 million dollars, from January’s net selling position of 13.4 million dollars.

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The past one week saw equities turnover increased by 6.6 percent to 24.7 million dollars, from 23.1 million dollars the previous week, bringing the year to date (YTD) turnover to 294.3 million dollars.

Foreign investors turned net sellers for the week, with a net selling position of 1.1 million dollars, from last week’s net buying position of 5.4 million dollars.

The market is currently trading at a price to earnings ratio (P/E) of 12.4x, 7.4 percent below the historical average of 13.4x, and a dividend yield of 4.7 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 12.4x is 26.4 percent above the most recent trough valuation of 9.8x experienced in the first week of February 2017, and 49.1 percent above the previous trough valuation of 8.3x experienced in December 2011.

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