NASI, NSE 25 Gain As NSE 20 Dips In Last Week’s Sessions

Last week, the equities market recorded mixed performance with both NASI and NSE 25 gaining by 0.9 percent, while NSE 20 shed 0.8 percent, taking their YTD performance to losses of 15.1 percent, 22.0 percent, and 33.3 percent, for NASI, NSE 25, and NSE 20.

The NASI performance was driven by gains recorded by large-cap stocks, with the highest gains being recorded in Equity Group, Bamburi, Co-operative Bank, and BAT of 3.2 percent, 2.9 percent, 2.7 percent, and 2.3 percent, respectively.

The gains were however weighed down by losses recorded by banking stocks such as NCBA Group and KCB Group, which declined by 3.1 percent and 1.2 percent respectively.

Equities turnover increased by 86.6% last week to USD 28.8 million, from USD 15.4 million recorded the previous week, taking the YTD turnover to USD 1.2 billion.

Foreign investors remained net sellers last week, with a net selling position of USD 11.1 million, from a net selling position of USD 3.7 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 9.6x, 25.6 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 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 9.6x is 25.3 percent 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 Market Posts Mixed Performance In 7 Days