NASI, NSE 20 And NSE 25 Record Gains During The Week

During the week, the equities market was on an upward trajectory, with NASI, NSE 20, and NSE 25 recording gains of 1.9, 1.1, and 2.5 percent respectively, taking their YTD performance to losses of 13.5, 20.0, and 32.6 percent, for NASI, NSE 25 and NSE 20 respectively.

The equities market performance was driven by gains recorded by EABL, KCB Group, Equity Group, and BAT of 5.5 percent, 5.3, 5.1, and 4.3 percent, respectively.

The gains were however weighed down by losses being recorded by Cooperative Bank and Standard Chartered Bank of 1.7 percent and 0.5 percent, respectively.

Equities turnover declined by 33.9 percent during the week to USD 19.0 million, from USD 28.8 million recorded the previous week, taking the YTD turnover to USD 1.3 bn.

Foreign investors remained net sellers during the week, with a net selling position of USD 0.1 million, from a net selling position of USD 11.1 million recorded the previous week, taking the YTD net selling position to USD 278.0 million.

The market is currently trading at a price to earnings ratio (P/E) of 10.0x, 22.8 percent below the 11-year historical average of 13.0x. The average dividend yield is currently at 4.9 percent, 0.9 percent points above the historical average of 4.0 percent.

According to Cytonn, with the market trading at valuations below the historical average, 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 10.0x is 30.0percent 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.