In the year ended 2019, Safaricom dominated the equities market on both the market turnover and in determining the direction of the market given its weight and liquidity in the Nairobi Securities Exchange (NSE).
According to analysts from Cytonn Investments, Safaricom has continued to be a key part of Kenyan equities portfolios, after accounting for 50.9 percent of NSE’s market capitalization in 2019.
Performance at the equities market during the year turned out to be mixed, with NASI and NSE 25 gaining by 18.5 percent and 15.5 percent, respectively, while NSE 20 declined by 6.3 percent.
Large cap gainers during the year at the equities market included Equity Group, KCB Group, Safaricom, NCBA, Barclays, Co-operative Bank and EABL which gained by 53.5, 44.2, 41.9, 32.6, 21.9, 14.3 and 13.6 percent, respectively.
The largest losers at the NSE were Bamburi, BAT and, DTB which lost (39.6), (31.0), and (30.4 percent) during the year, respectively.
Equity turnover during the year declined by 12.9 percent to USD 1.5 billion, from USD 1.7 billion in FY’2018.
Foreign investors turned net buyers, with a net inflow of USD 18.5 million, compared to net outflows of USD 425.6 million recorded in FY’2018.
The foreign investor inflows during the year can be attributed mainly to the improved financial performance of listed commercial banks in the country, coupled with the repeal of the rate cap law in the last quarter of the year, which led to increased foreign activity in the local bourse.
The equities market is currently trading at a price to earnings ratio (P/E) of 11.8x, 11.2 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.
The current P/E valuation of 11.8x is 21.3 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 41.6 percent above the previous trough valuation of 8.3x experienced in December 2011.
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