During the week, the equities market recorded mixed performance with NASI and NSE 25 recording gains of 1.1 and 0.1 percent respectively. The NSE 20 recorded a loss of 0.7 percent
The performance took YTD performance of the three Indices to losses of 15.1, 21.6, and 32.2 percent for NASI, NSE 25, and NSE 20, respectively.
The NASI performance was driven by gains recorded by large-cap stocks, with the highest gains being recorded in Safaricom and Bamburi of 2.8 and 1.9 percent respectively.
The gains were however weighed down by losses recorded by other large-cap stocks such as EABL, Co-operative Bank, and Standard Chartered Bank, which declined by 3.7, 3.4, and 3.2 percent respectively.
Equities turnover increased marginally by 0.5 percent during the week to USD 12.13 million from USD 12.08 million recorded the previous week, taking the YTD turnover to USD 1.2 billion.
Foreign investors turned net buyers during the week, with a net buying position of USD 0.1 million from a net selling position of USD 4.0 million recorded the previous week, taking the YTD net selling position to USD 263.1 million.
The market is currently trading at a price to earnings ratio (P/E) of 9.6x, 25.8 percent below the 11-year historical average of 13.0x. The average dividend yield is currently at 5.0 percent, which is 1.0 percent 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,” says Cytonn in their weekly report.
The current P/E valuation of 9.6x is 25.2 percent above the most recent valuation trough of 7.7x experienced in the first week of August 2020.