Equities Market Move Downhill During The Week

During the week, the equities market was on a downward trajectory, with NASI, NSE 25, and NSE 20 all recording losses of 0.1, 0.5, and 0.8 percent, respectively.

The slight dip of the Equities took their YTD performance to losses of 15.8, 21.3, and 30.8 percent, for NASI, NSE 25, and NSE 20, respectively.

The performance was mainly driven by losses recorded by large-cap stocks such as ABSA, BAT, and Equity Group, which declined by 4.1, 3.0, and 2.9 percent, respectively.

Equities turnover declined by 22.6 percent during the week to USD 10.9 million, from USD 14.0 million recorded the previous week, taking the YTD turnover to USD 1.2 billion.

Foreign investors remained net sellers during the week, with a net selling position of USD 2.0 mn, from a net selling position of USD 2.8 million recorded the previous week, taking the YTD net selling position to USD 259.2 million.

The market is currently trading at a price to earnings ratio (P/E) of 9.3x, 28.5 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 4.0 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 9.3x is 20.6% 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.

READ: Equities Markets On A Downward Trajectory During The Week