Equities Begin the Month on a High Note with Upward Performances

The equities market has started off the month of March on a high note after recording an overall upward trajectory, as compared to the previous two months of the year.

Stats compiled by analysts from Cytonn Investments indicate that NASI, NSE 20, and NSE 25 gained by 5.1, 2.7, and 5.8 percent, respectively.

The upward trajectory in the equities market took their Year To Date (YTD) performance to losses of (6.2), (9.6), and (5.5 percent), for the NASI, NSE 20, and NSE 25, respectively.

The performance in NASI was driven by gains recorded by large-cap stocks such as KCB, Co-operative Bank, Equity, and EABL of 11.8, 9.2, 6.9, and 6.9 percent, respectively.

The gains in banking stocks are partly attributable to increased local buying as investors anticipate the release of full-year results.

Equities turnover increased by 47.3 percent during the week to USD 42.7 million, from USD 29.0 million recorded the previous week attributable to increased foreign trading on large caps, taking the YTD turnover to USD 286.2 million.

Foreign investors remained net sellers for the week, with a net selling position of USD 18.5 million from a net selling position of USD 3.1 million recorded the previous week.

The market is currently trading at a price to earnings ratio (P/E) of 10.9x, 17.5 percent below the historical average of 13.2x, and a dividend yield of 6.1, 2.2 percentage 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,” said analysts from Cytonn.

The current P/E valuation of 10.9x is 12.7 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 31.7 percent above the previous trough valuation of 8.3x experienced in December 2011.

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