During the week, the equities market was on a downward trajectory, with NSE 20, NASI, and NSE 25 all recording losses of 1.5, 0.7, and 0.5 percent respectively.
The performance of the three indices took their YTD performance to losses of 15.7, 21.0, and 30.4 percent, for NASI, NSE 25, and NSE 20, respectively.
The performance was driven by declines recorded by large-cap stocks, with the highest declines being recorded in Diamond Trust Bank (DTB-K), Equity Group, and NCBA Group, which declined by 3.8, 2.3, and 1.6 percent respectively.
Equities turnover increased by 112.2 percent during the week to USD 47.4 mn, from USD 22.3 million recorded the previous week, taking the YTD turnover to USD 1.1 billion.
Foreign investors remained net buyers during the week, with a net buying position of USD 7.6 million, from a net buying position of USD 2.0 million recorded the previous week, taking the YTD net selling position to USD 250.8 million.
The market is currently trading at a price to earnings ratio (P/E) of 9.5, 26.7 percent below the 11-year historical average of 13.0x.
The average dividend yield is currently at 5.0 percent, unchanged from the previous week, and 1.0 percentage points above the historical average of 4.0percent.
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.
The current P/E valuation of 9.5x is 23.8% above the most recent valuation trough of 7.7x experienced in the first week of August 2020. The charts below indicate the historical P/E and dividend yields of the market.