Equities Recover from November’s Bleak Performances in Week 1 of December

The equities market was on an upward trend during the first week of December after recording consistent poor performances in the month of November.

NASI, NSE 20 and NSE 25 recorded gains of 1.5, 0.1 and 1.2 percent, respectively, taking their Year to Date (YTD) performance to gains/(losses) of 14.1, (7.5) and 11.7 percent, respectively.

According to analysts from Cytonn Investments, the performance in NASI was driven by gains recorded by large-cap stocks such as KCB Group, Safaricom, Equity Group and Barclays of 3.0, 2.9, 2.5 percent, and 1.6 percent, respectively.

Equities turnover declined by 14.0 percent during the week to USD 27.7 million, from USD 32.2 million the previous week, taking the YTD turnover to USD 1,411.6 million.

Foreign investors became net sellers for the week, with a net selling position of USD 65,025.0, from a net buying position of USD 0.7 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 12.1x, 8.9 percent below the historical average of 13.3x, and a dividend yield of 5.9 percent, 2.0 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 Investments.

The current P/E valuation of 12.1x is 24.9 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 46.0 percent above the previous trough valuation of 8.3x experienced in December 2011.

Read Also: Equities Displayed a Downward Trend in November as Market Re-Adjusts