Equities Turnover Hit USD 26.3 Million, a 342.1% Growth from Previous Week

The equities market recorded a turnover of USD 26.3 million, from USD 6.0 million the previous week.

The growth in turnover, consequently, took the equities Year to Date (YTD) turnover to USD 28.7 million.

According to analysts from Cytonn Investments, the equities market recorded mixed performance during the week, with NASI, and NSE 25 recording gains of 2.4 percent and 1.7 percent, respectively and NSE 20 declining by 0.3 percent.

The performance in the equities took their YTD performance to gains of 3.0 percent, 1.8 percent and 2.6 percent, for the NASI, NSE 20 and NSE 25, respectively.

More specifically, the performance in NASI was driven by gains recorded by large-cap stocks such as Diamond Trust Bank Kenya, Safaricom and EABL of 10.3 percent, 4.1 percent, and 3.3 percent, respectively.

Foreign investors became net buyers for the week, with a net buying position of USD 0.8 million, an improvement from a net selling position of USD 0.2 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 12.1x, 9.1 percent below the historical average of 13.3x, and a dividend yield of 5.5 percent, 1.6 percent points above the historical average of 3.9 percent.

With the market trading at valuations below the historical average, Cytonn Investments believe there is value in the market.

The current P/E valuation of 12.1x is 24.6 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 45.7 percent above the previous trough valuation of 8.3x experienced in December 2011.

Kenya Equities Outlook for 2020

Analysts from Cytonn Investments expect the equities market activity in 2020 to be driven by;

• A stable macro-economic environment, with the GDP growth rate for the year projected to come in at 5.7 percent, slightly higher than our 5.6 percent 2019 expectations, supported by increased productivity from 2019 spillovers, following the heavy rains experienced in Q4’2019. 2019 saw the delayed onset of the traditional long rains which adversely affected the performance of the Agricultural sector,
• a 12.4 percent growth in corporate earnings,
• Attractive valuations in a majority of the counters, with the market currently trading at P/E of 12.1x, 9.1 percent below the historical average of 13.3x, thereby providing attractive entry point, and possibly a higher capital appreciation gain potential, and
• Strong foreign inflows following the repeal of the rate cap law.