Foreign Investors Remain Net Sellers for the Week in Equities Market

Foreign investors remained net sellers in the equities market for the week, with the net selling position decreasing by 60.1 percent to USD 4.3 million, from USD 7.2 million the previous week.

After recording mixed performances for two weeks consecutively, the share value market at the Nairobi Securities Exchange (NSE) during the past week was on a downward trend with NASI, NSE 20 and NSE 25 falling by 0.7 percent, 0.9 percent and 0.3 percent, respectively.

The decline consequently took their Year To Date (YTD) performance to gains/losses of 5.9, (6.0) and 1.4 percent, for NASI, NSE 20 and NSE 25, respectively.

According to analysts from Cytonn Investments, the performance in NASI was driven by declines in Equity Group, BAT, Safaricom, and NIC Group, which declined by 4.1, 1.5, 1.4, and 1.3 percent, respectively.

On the other hand, equities turnover increased by 18.0 percent during the week to USD 26.0 million, from USD 22.0 million the previous week, taking the YTD turnover to USD 864.1 million.

In the week before, the equities market 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.

The market is currently trading at a price to earnings ratio (P/E) of 11.6x, 12.8 percent below the historical average of 13.3x, and a dividend yield of 5.4 percent, 1.6 percent points above the historical average of 3.8 percent.

With the market trading at valuations below the historical average, analysts from Cytonn Investments 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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