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Equities in October Recover from Bleak Performances in Previous Months

BY Soko Directory Team · November 4, 2019 12:11 am

The month of October was a good one for traders at the share market as equities were on an upward trend with NASI, NSE 20, and NSE 25 increasing by 9.7, 8.8, and 13.0 percent, respectively.

According to Cytonn Investment’s weekly report, the increase recorded in NASI was driven by gains in large-cap bank stocks such as NCBA Group, Equity Group, KCB Group and Co-operative Bank, which recorded gains of 30.7, 24.2, 23.2 and 22.3 percent, respectively, owing to expectations of the repeal of the interest rate cap.

For the week ended, the market was on an upward trend, with NASI, NSE 20, and NSE 25 increasing by 9.5, 9.8, and 13.2 percent, respectively, taking their YTD performance to gains/(losses) of 17.0 percent, (3.5 percent) and 14.9 percent, respectively.

Equities turnover increased by 55.3 percent during the month to USD 157.8 million, from USD 101.6 million in September 2019. Foreign investors became net sellers for the month, with a net selling position of USD 14.8 million, compared to September’s net buying position of USD 6.6 million.

The last week of October saw equities turnover increased by 82.2 percent to USD 71.1 million, from USD 39.0 million the previous week, bringing the year to date (YTD) turnover to USD 1,242.1 million.

Foreign investors remained net sellers for the week, with a net selling position of USD 4.7 million, a 65.6 percent increase from last week’s net selling position of USD 2.8 million.

The market is currently trading at a price to earnings ratio (P/E) of 12.2x, 8.3 percent below the historical average of 13.3x, and a dividend yield of 6.4 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 12.2x is 25.9 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 47.1 percent above the previous trough valuation of 8.3x experienced in December 2011.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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