Equities Maintain a Positive Performance in Week 2 of June

The first week of June saw the equities market record a positive performance, with NASI, NSE 20 and NSE 25 gaining by 2.8, 1.4, and 2.1 percent respectively.

In the second week of June, the equities market has maintained the positive performance, with NASI, NSE 20 and NSE 25 gaining by 0.4 percent, 0.9 percent, and 0.9 percent, taking their YTD performance to gains/ (losses) of 7.1 percent, (4.7 percent) and 2.7 percent, for NASI, NSE 20 and NSE 25, respectively.

According to Cytonn Investments’ weekly report, the performance of NASI was driven by gains in large-cap stocks such as Bamburi, EABL, Equity Group and Barclays Bank, which recorded gains of 9.4, 3.0, 3.0 and 2.5 percent, respectively.

The gain in the NASI was however weighed down by declines in BAT, Standard Chartered Bank Kenya (SCBK) and Safaricom, which recorded declines of 2.6, 1.6, and 1.5 percent respectively.

Equities turnover declined by 65.8 percent during the week to USD 12.9 million, from USD 37.6 million the previous week, due to reduced market activity and a shortened trading week, taking the YTD turnover to USD 680.0 million.

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Foreign investors remained net buyers for the week, with a net buying position of USD 0.3 million, a 97.5 percent decline from a net buying position of USD 11.2 million last week.

The market is currently trading at a price to earnings ratio (P/E) of 11.9x, 10.9 percent below the historical average of 13.4x, and a dividend yield of 5.1 percent, above the historical average of 3.8 percent.

Analysts from Cytonn Investments believe that with the market trading at valuations below the historical average, there is value in the market.

The current P/E valuation of 11.9x is 21.4 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 43.4 percent above the previous trough valuation of 8.3x experienced in December 2011.

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