Equities: NASI and NSE 25 Record Gains as NSE 20 Declines

During the week, the equities market recorded a mixed performance with NASI and NSE 25 gaining by 0.9 and 1.0 percent, respectively while NSE 20 declined by 3.6 percent.

This performance took their Year To Date (YTD) performance to gains/ (declines) of 2.4, (17.7) and (3.0 percent), for NASI, NSE 20 and NSE 25, respectively.

According to the Cytonn Weekly report, the performance in NASI was driven by gains in Co-operative Bank, Equity Group and EABL, which rose by 5.8, 2.3 and 2.1 percent, respectively.

The gains were weighed down by declines recorded in Bamburi, Diamond Trust Bank Kenya (DTBK) and Barclays Bank Kenya (BBK) of 5.5 percent, 2.6 percent, and 1.8 percent, respectively.

Equities turnover declined by 42.6 percent during the week to USD 17.2 million, from USD 30.1 million the previous week, taking the YTD turnover to USD 1.0 bn.

Foreign investors remained net sellers for the week, with the net selling position increasing by 198.8 percent, to USD 1.3 million, from a net selling position of USD 0.4 million the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.0x, 17.3 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 11.0x is 13.4 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 32.5 percent above the previous trough valuation of 8.3x experienced in December 2011.

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