Equities Record Poor Performances with Turnover Declining by 18%

The first week of November saw the equities market on a downward trend with NASI, NSE 20 and NSE 25 declining by 2.0, 0.6 and 3.0 percent, respectively.

Consequently, the trend in equities took the Year To Date (YTD) performance to gains/losses of 14.6, (4.1) and 11.4 percent, for NASI, NSE 20 and NSE 25, respectively.

According to analysts from Cytonn Investments, the performance in NASI was driven by losses recorded by stocks mainly in the Banking sector with NCBA Group, KCB Group, Barclays Bank of Kenya and Standard Chartered Bank recording losses of 11.7, 6.3, 5.9 and 5.8 percent, respectively.

Foreign investors remained net sellers for the week, with a net selling position of USD 6.7 million, increasing by 41.6 percent from a net selling position of USD 4.7 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 12.3x, 7.3 percent below the historical average of 13.3x, and a dividend yield of 6.5 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 12.3x is 26.9 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 48.3 percent above the previous trough valuation of 8.3x experienced in December 2011.

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