Equities Further Decline with Turnover Decreasing by 54.6%

The week ended saw the equities market on a further downward trend from the previous week, with NASI, NSE 20 and NSE 25 declining by 2.4, 3.1 and 2.7 percent, respectively.

The poor performance in equities took their Year To Date (YTD) performance to gains/(losses) of (6.4), 11.1 and 8.5 percent, respectively.

According to Cytonn Investments, the performance in NASI was driven by losses recorded by large-cap stocks, with BAT, Barclays Bank of Kenya, Co-operative Bank and Safaricom recording losses during the week of 8.3, 6.7, 4.5, and 4.2 percent, respectively.

Foreign investors remained net buyers for the week, with a net buying position of USD 2.3 million, a 134.1 percent increase from a net selling position of USD 6.6 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 12.1x, 9.0 percent below the historical average of 13.3x, and a dividend yield of 6.7 percent, 2.8 percent points 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 12.1x is 24.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 45.8 percent above the previous trough valuation of 8.3x experienced in December 2011.

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