Equities Record Mixed Performance with Turnover Spiking by 19.2%

The equities market recorded mixed performance in week 2 of December despite having recorded an upward trend in the first week.

Particularly, NASI gained by 0.1 percent while NSE 20 and NSE 25 recorded losses of 1.3 and 0.6 percent, respectively.

According to analysts from Cytonn Investments, the mixed performance experienced in the equities market took the Year to Date (YTD) performance to gains/(losses) of 14.3, (8.7) and 11.0 percent, for the NASI, NSE 20 and NSE 25, respectively.

The 0.1 percent gain experienced in NASI was driven by gains recorded by large-cap stocks such as Standard Chartered, Barclays, KCB Group and Safaricom of 3.3, 2.8, 1.5, and 0.7 percent, respectively.

Equities turnover increased by 19.2 percent during the week to USD 33.0 million, from USD 27.7 million the previous week, taking the YTD turnover to USD 1,444.7 million.

Foreign investors became net buyers for the week, with a net buying position of USD 4.7 million, an improvement from a net selling position of USD 0.1 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 12.3x, 7.4 percent below the historical average of 13.3x, and a dividend yield of 5.8 percent, 1.9 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,” says analysts from Cytonn Investment.

The current P/E valuation of 12.3x is 26.6 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 48.0 percent above the previous trough valuation of 8.3x experienced in December 2011.

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