Equities Record Mixed Performance for the Second Week Running

For the second week running, the equities markets recorded mixed performance with the NASI and NSE 20 gaining by 0.5 and 0.1 percent, respectively while the NSE 25 declined by 0.2 percent.

This performance took their year to date (YTD) performance to gains/ (losses) of 6.6, (5.1) and 1.7 percent, for NASI, NSE 20 and NSE 25, respectively.

According to analysts from Cytonn Investments, the performance in NASI was driven by gains made Equity Group, British American Tobacco (BAT) and Safaricom PLC, which recorded gains of 3.6 percent, 2.6 percent and 0.9 percent, respectively.

Equities turnover decreased by 9.9 percent during the week to USD 22.0 million, from USD 24.4 million the previous week, taking the YTD turnover to USD 838.1 million.

Foreign investors remained net sellers for the week, with the net selling position increasing by 13.2 percent to USD 7.2 million, from USD 6.4 million the previous week.

Last week, 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 market is currently trading at a price to earnings ratio (P/E) of 11.7x, 12.6 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, analysts from Cytonn Investment believe there is value in the market.

The current P/E valuation of 11.7x is 20.6 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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