May was a tough month for traders of equities at the Nairobi Securities Exchange (NSE) as the values of shares registered a downward trend.
NASI, NSE 25, and NSE 20 and recorded declines of 4.7, 7.5, and 4.3 percent, respectively, taking their YTD performance to gains of 6.7 and 1.8 percent, and a loss of 5.5 percent, respectively.
The decline recorded in NASI was driven by declines in large-cap stocks such as Barclays Bank Kenya, EABL, Equity Group, and KCB Group, which recorded declines of 14.6, 11.0, 9.3, and 7.1 percent, respectively.
The first week of June saw the equities market record a positive performance, with NASI, NSE 20 and NSE 25 gaining by 2.8 percent, 1.4 percent, and 2.1 percent, respectively.
NASI’s gain was majorly driven by gains recorded in large-cap counters such as Co-operative Bank, Equity Group, Standard Chartered Bank Kenya (SCBK) and Safaricom, which recorded gains of 8.3, 6.6, 3.5, and 3.4 percent, respectively.
Equities turnover rose by 26.3 percent during the month to 123.3 million US dollars, from 97.6 million dollars in April 2019.
Foreign investors remained net buyers for the month, with a net buying position of 21.5 million dollars, a 430.1 percent increase from April’s net buying position of 4.1 million dollars.
The equities turnover during the past week increased by 51.3 percent to 37.6 million dollars, from 24.9 million dollars the previous week, bringing the year to date (YTD) turnover to 667.1 million dollars.
Also, foreign investors remained net buyers for the week, with a net buying position of 11.2 million dollars, a 116.7 percent increase from last week’s net buying position of 5.2 million shillings.
The market is currently trading at a price to earnings ratio (P/E) of 12.1x, 9.4 percent below the historical average of 13.4x, and a dividend yield of 4.9 percent, above the historical average of 3.8 percent.
The current P/E valuation of 12.1x is 23.5 percent above the most recent trough valuation of 9.8x experienced in the first week of April 2017, and 45.8 percent above the previous trough valuation of 8.3x experienced in December 2011.
This means that there is still value in the market and it is not too late to invest.