Equities Record Bleak Performances for Third Week Running in January

The equities market has maintained bleak performances for the third week in January after recording a downward trend in the week ended.

According to Cytonn Investments, NASI, NSE 20, and NSE 25 recorded declines of (0.8), (1.0), and (0.7 percent), respectively.

These performances in the equities took their YTD performance to (0.9), (0.4) and (0.6) percent, for the NASI, NSE 20, and NSE 25, respectively.

The performance in NASI was driven by losses recorded by large-cap stocks such as Bamburi, Barclays and Co-operative bank of (8.4), (3.0) and (2.5) percent, respectively.

Equities turnover decreased by 29.9 percent during the week to USD 28.2 million, from USD 40.2 million recorded the previous week, taking the YTD turnover to USD 97.1 million.

Foreign investors remained net buyers for the week, with a net buying position of USD 1.6 million, a 75.0 percent decrease from a net buying position of USD 6.6 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 11.3x, 15.0 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,” says analysts from Cytonn Investments.

The current P/E valuation of 11.3x is 16.6 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 36.3 percent above the previous trough valuation of 8.3x experienced in December 2011.

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