Equities Turnover Up By 26.8% As Major Indices Shed Off

The equities market was on a downward trajectory during the week with NASI, NSE 20, and NSE 25 shedding off 2.1, 1.7, and 1.6 percent, respectively, taking their YTD performance to gains of 1.8, 0.8, and 0.7 percent, respectively.

The equities market performance was driven by losses recorded by large-cap stocks such as Diamond Trust Bank (DTB-K), Safaricom, KCB, and Co-operative Bank of 5.2, 2.7, 2.4, and 2.3 percent, respectively.

The declines were however mitigated by gains recorded by other large-cap stocks such as BAT and Bamburi which gained by 2.1 percent each.

Equities turnover increased by 26.8 percent during the week to USD 24.1 million, from USD 19.0 million recorded the previous week, taking the YTD turnover to USD 57.6 million.

Foreign investors remained net buyers, with a net buying position of USD 0.2 mn, from a net buying position of USD 6.6 million recorded the previous week, taking the YTD net buying position to USD 4.9 million.

The market is currently trading at a price to earnings ratio (P/E) of 11.6x, 10.3 percent below the 11-year historical average of 12.9x.

The average dividend yield is currently at 4.6 percent, 0.1 percentage points above what was recorded the previous week and 0.5 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 a higher risk tolerance.

The current P/E valuation of 11.6x is 50.6 percent above the most recent valuation trough of 7.7x experienced in the first week of August 2020.