Equities Turnover Register 27.3% Decline During the Week

Equities turnover decreased by 27.3 percent during the week to USD 26.9 million from USD 37.0 million the previous week, taking the YTD turnover to USD 743.8 million.

In general, the equities market was on a downward trend with NASI, NSE 20 and NSE 25 declining by 1.7, 2.2, and 2.2 percent, respectively.

This performance took their YTD performance to gains/(losses) of 5.0 percent, (6.6 percent), and 0.2 percent for NASI, NSE 20, and NSE 25, respectively.

According to Cytonn Investment’s Weekly Report,  performance in the NASI was driven by declines in EABL, NIC Group, and Bamburi that declined by 5.1 percent, 4.1 percent, and 2.5 percent, respectively.

Foreign investors remained net sellers for the week, with a net selling position of USD 0.7 million from USD 5.9 million the previous week.

Safaricom and Equity Bank reached a financing deal which enables Safaricom’s suppliers, dealers, and agents to access up to 200 million shillings in unsecured short-term loans to manage cash flow positions ahead of payment.

KCB Group served National Bank of Kenya (NBK) with take-over documents to acquire a 100 percent stake of ordinary shares of NBK upon conversion of the preference shares into ordinary shares.

The market is currently trading at a price to earnings ratio (P/E) of 11.6x, 13.2 percent below the historical average of 13.3x; and a dividend yield of 5.3 percent, 1.5 percent points 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 11.6x is 19.4 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 39.4 percent above the previous trough valuation of 8.3x experienced in December 2011.

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