During the first quarter of 2019, the equities market registered an upward trend where NASI, NSE 25 and NSE 20 all gained to the thrill of investors at the Nairobi Securities Exchange (NSE).
NASI gained by 12.2 percent, NSE 25 by 10.8 percent, and NSE 20 by 0.4 percent. The three elevated their YTD performance as at the end of March to 12.2 percent, 10.8 percent, and 0.4 percent, respectively.
The equities market performance during the quarter was supported by gains in large caps such as NIC Group, Safaricom, Equity and EABL that rose by 30.8, 24.1, 19.4, and 18.0 percent, respectively.
On the other hand, equities performance over the past week fell and NASI, NSE 25, as well as NSE 20, declined marginally by 0.3, 0.1, and 1.7 percent, respectively, due to declines in large-cap stocks.
Equity, DTB, Co-operative Bank and Safaricom, declined by 4.4, 4.1, 3.9, and 2.1 percent, respectively.
For the last twelve months (LTM), NASI, NSE 25 and NSE 20 have declined by 17.6, 20.7, and 26.0 percent, respectively.
Equities turnover gained by 29.5 percent during the quarter to 445.8 million US dollars in Q1’2019 from 344.2 million dollars in Q4’2018, taking the YTD turnover to 445.8 million dollars.
Equities turnover during the past week dropped by 10.7 percent to 30.7 million US dollars from 34.4 million dollars in the previous week.
Foreign investors remained net buyers this week, with a net buying position of 7.2 million dollars, which is a 166.8 percent increase from last week’s net buying position of 2.7 million dollars.
The market is currently trading at a price to earnings ratio (P/E) of 13.2x, 1.6 percent below the historical average of 13.4x, and a dividend yield of 4.7 percent, above the historical average of 3.7 percent.
According to Cytonn Investment’s weekly report, with the market trading at valuations below the historical average, we believe there is value in the market.
The current P/E valuation of 13.2x is 35.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 58.6 percent above the previous trough valuation of 8.3x experienced in December 2011.