NASI, NSE 20, NSE 25 Record Gains During Last Week’s Session

During the week, the equities market was on an upward trend, with NASI, NSE 20, and NSE 25 recording gains of 3.7, 2.0, and 3.1 percent respectively.

The upward trend in the Equities took their YTD performance to losses of 15.6, 24.1, and 20.0 percent for NASI, NSE 20, and NSE 25, respectively.

The performance of the NASI was driven by gains recorded by large-cap stocks, with Equity, Safaricom, and KCB gaining by 7.3, 6.1, and 1.8, respectively, while both BAT and Bamburi recorded gains of 1.6 percent.

Equities turnover declined by 51.3 percent during the week to USD 22.5 million, from USD 46.3 million recorded the previous week, taking the YTD turnover to USD 671.5 million.

Foreign investors remained net sellers during the week, with the net selling position declining by 70.6 percent to USD 7.1 mn, from a net selling position of USD 24.0 mn recorded the previous week, a trend replicated in other emerging equity markets globally as foreign investors sold off riskier assets in favor of safe havens.

The market is currently trading at a price to earnings ratio (P/E) of 8.5x, 35.4% below the historical average of 13.2x.

The current average dividend yield is at 5.6 percent, 1.6 percentage points above the historical average of 4.0 percent.

“With the market trading at valuations below the historical average, we believe there are pockets of value in the market for investors with higher risk tolerance and are willing to wait,” said Cytonn.

The current P/E valuation of 8.5x is 1.2% above the most recent valuation trough of 8.4x experienced in the last week of March 2020. The charts below indicate the historical P/E and dividend yields of the market.