NASI and NSE 25 Gain as NSE 20 Dips as Equities Register Mixed Performance

The equities market recorded mixed performances, with NASI and NSE 25 gaining by 1.3 and 0.9 percent respectively, while NSE 20 declined by 0.7 percent last week.

The YTD performance of the three indices to gained 12.5, 2.2, and 10.9 percent for NASI, NSE 20 and NSE 25, respectively.

The performance in NASI was driven by gains in large-cap stocks such as Equity Group, Barclays Bank of Kenya, and Safaricom, which gained by 4.9, 3.9 and 2.8 percent respectively.

Equities turnover declined by 45.1 percent during the week to USD 30.7 million from USD 55.8 million the previous week, taking the YTD turnover to USD 380.7 million.

Foreign investors turned net buyers for the week, with a net buying position of USD 3.2 million, a decline from last week’s net buying position of USD 4.6 million.

The market is currently trading at a price to earnings ratio (P/E) of 13.1x, 2.2 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, “we believe there is value in the market,” said Cytonn Investments.

The current P/E valuation of 13.1x is 35.1 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 57.8 percent above the previous trough valuation of 8.3x experienced in December 2011.

The Fuel Price

During the week, the Energy Regulatory Commission (ERC) released their monthly statement on the maximum retail fuel prices in Kenya effective from 15^th March 2019 to 14^th April 2019.

Petrol prices have increased by 1.3 percent to 101.4 shillings from 100.1 shillings per liter, while diesel and kerosene prices have increased by 0.7 percent and 3.1 percent to 96.6 shillings and 99.5 shillings per liter.

There was an increase in the average landing costs of imported super petrol by 3.7 percent to USD 568.6 per ton in February, from USD 548.2 per ton in January.

Landing costs for diesel and kerosene as well increased by 2.8 percent and 9.2 percent to USD 561.6 per ton and USD 650.2 per ton in February, respectively, from USD 546.4 per ton and USD 595.8 per ton in January.

The Free on Board (FOB) price of Murban crude oil lifted in February 2018 also increased by 8.9 percent to USD 66.4 per barrel from USD 61.0 per barrel in January 2019.

The increase in prices was, however, mitigated by the 1.1 percent appreciation of the Kenyan Shilling against the US Dollar to 100.2 shillings in February, from 101.3 shillings in January.