Equities Market on a Downward Trend with Turnover Declining by 7.5%

The equities market was on a downward trend this week, compared to the previous week where the market experienced an upward performance from the stocks giving traders mixed reactions in the month of September.

NASI, NSE 25 and NSE 20 declined by 0.3, 0.3 and 0.5 percent, respectively, taking their YTD performance to gains/(declines) of 2.9, (14.0) and (2.7 percent), for NASI, NSE 20 and NSE 25, respectively.

According to Cytonn Investments, the performance in NASI was driven by declines in Bamburi, NIC Group, Co-operative Bank of Kenya, EABL and Safaricom, which declined by 7.3 percent, 3.2 percent, 2.5 percent, 1.5 percent and 1.5 percent, respectively.

Equities turnover declined by 7.5 percent during the week to USD 25.2 million, from USD 27.3 million the previous week, taking the YTD turnover to USD 1.1 billion.

Foreign investors remained net buyers for the week, with a net buying position of USD 2.6 million, a 53.7 percent decline from a net buying position of USD 5.5 million the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 10.9x, 17.9 percent below the historical average of 13.3x, and a dividend yield of 5.5 percent, above the historical average of 3.9 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 10.9x is 12.6 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 31.6 percent above the previous trough valuation of 8.3x experienced in December 2011.

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