Equities Record Mixed Performance: NASI and NSE 20 Gain, NSE 25 Declines

The equities market recorded mixed performance in week two of October 2019, with NASI and NSE 20 gaining by 0.3 percent and 0.7 percent.

While NASI and NSE 20 recorded gains, the NSE 25 declined by 0.2 percent, taking their YTD performance to gains/losses of 5.1 percent, (13.4 percent) and (1.5 percent), for NASI, NSE 20 and NSE 25, respectively.

According to the weekly report released by Cytonn Investments, the performance in NASI was driven by gains in Safaricom, Co-operative Bank, and Bamburi, which gained by 1.4 percent, 0.4 percent, and 0.8 percent, respectively.

Equities turnover recorded bigger declines than the previous week, where the turnover decreased by 47.7 percent as compared to the previous week’s 7.5 percent. This week, the turnover recorded was USD 13.4 million, from USD 25.6 million the previous week, taking the YTD turnover to USD 1,097.6 million.

Foreign investors remained net sellers for the week, with a net selling position of USD 0.4 million, from a net buying position of USD 2.2 million the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.2x, 15.7 percent below the historical average of 13.3x, and a dividend yield of 5.8 percent above the historical average of 3.9 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 11.2x is 15.5 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 34.9 percent above the previous trough valuation of 8.3x experienced in December 2011.

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