Equities Market Record Mixed Performances with NASI Remaining Flat

The share value market at the Nairobi Securities Exchange (NSE) during the past week was faced with an inconsistent performance with NASI remaining flat while NSE 20 and NSE 25 both gained.

While NASI recorded no gains or losses, NSE 20 and NSE 25 gained by 0.5 and 0.2 percent, respectively, taking their YTD performance to gains/ (losses) of 6.5, (5.5) and 2.1 percent, for NASI, NSE 20 and NSE 25, respectively.

The performance in NASI was driven by declines in KCB Group, Co-op Bank and Safaricom which declined by (1.9), (1.2) and (0.4 percent), respectively, which offset the gains made in East Africa Breweries Limited (EABL), Standard Chartered Bank Kenya (SCBK) and Equity Group, which recorded gains of 1.9, 1.8 and 1.3 percent, respectively.

According to the Cytonn Investments Weekly Report, equities turnover increased by 17.2 percent during the week to USD 24.4 million, from USD 20.9 million the previous week, taking the YTD turnover to USD 816.1 million.

Foreign investors remained net sellers for the week, with the net selling position increasing by 36.1 percent to USD 6.4 million, from USD 4.7 million the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.6x, 13 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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