Equities on a Downward Trend as Large Cap Stocks Record Losses

The equities market was on a downward trend with NASI, NSE 20 and NSE 25 recording declines of (3.0 percent), (1.2 percent) and (2.5 percent), respectively.

The trend at the equities market took the Year to Date (YTD) performance to gains/(losses) of (0.1 percent), 0.6 percent and 0.04 percent, for the NASI, NSE 20 and NSE 25, respectively.

According to analysts from Cytonn Investments, the performance in NASI was driven by losses recorded by most large-cap stocks such as Equity Bank, KCB Group, BAT, Safaricom and Co-operative Bank of (6.4 percent), (5.9 percent), (4.0 percent), (4.0 percent) and (3.0 percent), respectively.

Equities turnover increased by 52.8 percent during the week to USD 40.2 million, from USD 26.3 million recorded the previous week, taking the YTD turnover to USD 69.0 million.

Foreign investors remained net buyers for the week, with a net buying position of USD 6.6 million, a 726.4 percent increase from a net buying position of USD 0.8 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.8x, 10.8 percent below the historical average of 13.3x, and a dividend yield of 5.7 percent, 1.8 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” reads the weekly report by Cytonn Investments.

The current P/E valuation of 11.8x is 21.9 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 42.4 percent above the previous trough valuation of 8.3x experienced in December 2011.

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