Last week, the equities market was on an upward trajectory, with both NASI and NSE 25 gaining by 1.4 percent, while NSE 20 gained by 2.4 percent.
The gains, according to a report by Cytonn, took their YTD performance to losses of 9.8, 30.7, and 18.4 percent for NASI, NSE 20, and NSE 25, respectively.
The equities market performance was driven by gains recorded by large-cap stocks such as Bamburi, Diamond Trust Bank (DTBK), and ABSA of 8.3, 7.8, and 5.0 percent, respectively.
The gains were however weighed down by losses recorded by other large-cap stocks such as Standard Chartered Bank and BAT of 1.5 percent and 1.3 percent, respectively.
Equities turnover declined by 32.9 percent during the week to USD 12.4 mn, from USD 18.4 mn recorded the previous week, taking the YTD turnover to USD 1.4 bn.
Foreign investors remained net sellers during the week, with a net selling position of USD 1.7 mn, from a net selling position of USD 2.3 mn recorded the previous week, taking the YTD net selling position to USD 281.5 mn.
The market is currently trading at a price to earnings ratio (P/E) of 11.2x, 13.6 percent below the 11-year historical average of 12.9x.
The average dividend yield is currently at 4.7 prcent, 0.1 percentage points below the 4.8 percent recorded the previous week, and 0.6 percentage points above the historical average of 4.1 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 11.2x is 45.2percent above the most recent valuation trough of 7.7x experienced in the first week of August 2020.