Equities Continue to Dip as November Comes to a Close

The equities market did not record any improvements from last week’s performance, as NASI, NSE 20 and NSE 25 all recorded declines.

According to Cytonn Investments, NASI, NSE 20 and NSE 25 declined by 0.7 percent, 1.3 percent and 0.2 percent, respectively, taking their Year To Date (YTD) performance to gains/(losses) of 10.3 percent, (7.6 percent), and 8.2 percent, respectively.

More specifically, the performance in NASI was driven by losses recorded by large-cap stocks with Bamburi, KCB, BAT, and DTBK recording losses during the week of 9.8 percent, 2.1 percent, 2.0 percent, and 1.1 percent, respectively.

Equities turnover decreased by 81.2 percent during the week to USD 5.0 million, from USD 26.4 million the previous week, taking the YTD turnover to USD 1,331.8 million.

Foreign investors recorded a net selling position of USD 0.3 million, a 113.0 percent decrease from a net buying position of USD 2.3 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.8x, 11.2 percent below the historical average of 13.3x, and a dividend yield of 6.1 percent, 2.2 percent points 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 11.8x is 21.6 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 42.2 percent above the previous trough valuation of 8.3x experienced in December 2011.

Read Also: T-Bills Continue To Wobble As The Month Nears The End