NASI, NSE 20 And NSE 25 Declined In The Month Of July

By Juma / Published August 3, 2020 | 9:01 am

During the month of July, the equities market was on a downward trajectory, with NASI, NSE 20, and NSE 25 declining by 3.2, 7.1, and 4.9 percent respectively.

The equities market performance during the month was driven by large declines recorded by Co-operative bank, ABSA, and SCBK of 13.6, 9.8, and 9.4 percent respectively.

Similarly, during the week, the equities market was on a downward trend, with NASI, NSE 20, and NSE 25 recording declines of 1.0, 4.4, and 2.0 percent respectively.

The performance during the week took the equities YTD performance to losses of 19.9, 32.0, and 25.4 percent for NASI, NSE 20, and NSE 25, respectively.

The NASI performance was driven by declines recorded by large-cap stocks, with the highest declines being recorded in EABL, Co-operative bank, and NCBA, which lost by 7.7, 5.8, and 5.3 percent respectively.

However, the decline was slowed down by gains recorded by other large-cap stocks, with the highest gains being recorded by Safaricom and Equity which both gained by 0.2 percent and KCB which gained by 0.1 percent.

Equities turnover increased by 9.0 percent during the month to USD 125.5 mn, from USD 115.1 mn in June 2020. Foreign investors remained net sellers with a net selling position of USD 49.8 mn, compared to June’s net selling position of USD 15.9 mn.

During the week, equities turnover declined by 53.8 percent during the week to USD 14.2 million, from USD 30.7 million recorded the previous week.

This took their YTD turnover to USD 934.3 million, with foreign investors turning into net buyers, with a net buying position of USD 0.5 mn, from a net selling position of USD 12.7 million recorded the previous week, taking the YTD net selling position to USD 265.6 mn.

The market is currently trading at a price to earnings ratio (P/E) of 7.9x, 39.4% below the historical average of 13.1x.

The average dividend yield is currently at 5.3 percent, unchanged from the previous week, and 1.3 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 out the pandemic,” said Cytonn.

The current P/E valuation of 7.9x is 1.5 percent above the most recent valuation trough of 7.8x experienced in the second week of July 2020. The charts below indicate the historical P/E and dividend yields of the market.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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