Traders Disappointed as Equities Performance Register a Drop at NSE

Traders of share values at the Nairobi Securities Exchange (NSE) during the week were met with an unwelcomed performance of equities in the market.

The market registered a downward trend where all the three indices; NASI, NSE 20 and NSE 25 declined.

NASI dropped by 6.5 percent, whereas NSE 20 plunged down by 3.3 percent and NSE 25 recorded a decline of 6.6 percent.

The YTD performance for NASI gained by 2.0 percent as that for NSE 20 and NSE 25 recorded losses of 5.9 percent and 0.7 percent.

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The performance of NASI was driven by declines in large-cap stocks such as KCB Group, Equity Group, Standard Chartered Bank Kenya (SCBK), Safaricom and Co-operative Bank, which declined by 10.4, 6.5, 6.1, 5.6, and 4.0 percent, respectively.

Equities turnover rose by 75.7 percent during the week to 32.3 million US dollars, from 18.4 million dollars the previous week, taking the YTD turnover to 604.6 million dollars.

Foreign investors turned net buyers for the week, with a net buying position of 3.8 million US dollars, from a net selling position of 0.5 million dollars last week.

The market is currently trading at a price to earnings ratio (P/E) of 11.2x, 16.0 percent below the historical average of 13.4x, and a dividend yield of 5.3 percent, above the historical average of 3.8 percent.

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According to Cytonn Investments Weekly Report dubbed Investing in Unit Trust Funds, with the market trading at valuations below the historical average, there is value in the market.

The current P/E valuation of 11.2x is 15.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 35.2 percent above the previous trough valuation of 8.3x experienced in December 2011.