The equities market was on a downward trajectory, in the week ended as the world and Kenya continue to deal with the ongoing pandemic, that is, the Coronavirus.
Yesterday, 22nd March 2020, Health Cabinet Secretary, Mutahi Kagwe confirmed another 8 new cases of coronavirus in Kenya, bringing the total to 15 confirmed positive cases.
According to the Cytonn Report, NASI, NSE 20 and NSE 25 declined by 0.5, 4.7, and 3.4 percent, respectively, taking their YTD performance to losses of 20.1, 23.7, and 21.4 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 EABL, Bamburi, Equity Bank and NCBA of 13.9, 8.2, 7.0 and 5.7 percent, respectively. The losses are attributable to the ongoing Coronavirus pandemic, with investors selling out of the equities market.
Equities turnover decreased by 8.8 percent during the week to USD 50.0 million, from USD 54.8 million recorded the previous week, taking the YTD turnover to USD 390.9 million.
Foreign investors remained net sellers for the week, with a net selling position of USD 28.9 million, from a net selling position of USD 32.2 million recorded the previous week. The trend reflects the global equity markets with foreign investors disposing of riskier assets in favor of safe havens.
The market is currently trading at a price to earnings ratio (P/E) of 9.2x, 30.7 percent below the historical average of 13.2x, and a dividend yield of 7.2 percent, 3.2 percent points above the historical average of 4.0 percent.
“With the market trading at valuations below the historical average, we believe there is value in the market,” maintain analysts from Cytonn Investments.
The current P/E valuation of 9.2x is 5.6 percent below the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 10.4 percent above the previous trough valuation of 8.3x experienced in December 2011.