Equities Turnover Increases by 187 Percent During the Week

Equities turnover increased by 186.9 percent during the week to USD 37.0 million (3.7 billion shillings) from USD 12.9 million (1.29 billion shillings) the previous week, taking the Year-to-Date (YTD) turnover to USD 717.0 million.

During the week, the equities market was on an upward trend with NASI, NSE 20 and NSE 25 gaining by 0.1 percent, 1.1 percent and 0.6 percent, respectively, taking their YTD performance to gains/(losses) of 6.8 percent, (4.5 percent), and 2.4 percent for NASI, NSE 20 and NSE 25, respectively.

The gain in the NASI was driven by gains in NIC Group, Standard Chartered Bank Kenya and BAT which gained by 4.1, 2.1 and 1.6 percent, respectively.

The gains were however subdued by declines in large cap stocks such as Bamburi, Barclays Bank Kenya (BBK), Diamond Trust Bank Kenya (DTBK) and Co-operative Bank, which declined by 3.7, 1.9, 1.5 and 1.2 percent, respectively.

Foreign investors turned net sellers for the week, with a net selling position of USD 5.9 million, from last week’s net buying position of USD 0.3 million.

The market is currently trading at a price to earnings ratio (P/E) of 11.8x, 11.4 percent below the historical average of 13.4x, and a dividend yield of 5.1 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.

The current P/E valuation of 11.8x is 11.5 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 37.3 percent above the previous trough valuation of 8.3x experienced in December 2011.

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