Equities Market Post A Mixed Performance Last Week

Last week, the equities market recorded mixed performance, with NSE 20 declining by 0.6 percent, while NASI and NSE 25 remained relatively unchanged increasing marginally by 0.03 and 0.1 percent, respectively.

This week’s performance took their YTD performance to gains of 1.5, 13.4, and 9.9 percent for NSE 20, NASI, and NSE 25, respectively.

The equities market performance was mainly driven by losses recorded by large-cap stocks such as BAT, NCBA Group, and EABL of 3.1, 2.7, and 0.5 percent, respectively.

During the week, equities turnover declined by 50.9 percent to USD 21.9 million, from USD 44.7 million recorded the previous week, taking the YTD turnover to USD 597.4 million.

Read More: EABL, BAT, KCB Group, And Equity Group Drive Gains In Equities

Foreign investors remained net sellers, with a net selling position of USD 2.7 million, from a net selling position of USD 7.2 million recorded the previous week, taking the YTD net selling position to USD 27.4 million.

The market is currently trading at a price-to-earnings ratio (P/E) of 14.3x, 10.4 percent above the historical average of 12.9x, and a dividend yield of 3.4 percent, 0.7 percentage points below the historical average of 4.1 percent.

Key to note, NASI’s PEG ratio currently stands at 1.6x, an indication that the market is trading at a premium to its future earnings growth.

Basically, a PEG ratio greater than 1.0x indicates the market may be overvalued while a PEG ratio less than 1.0x indicates that the market is undervalued. Excluding Safaricom, the market is trading at a P/E ratio of 10.2x and a PEG ratio of 1.1x.

The current P/E valuation of 14.3x is 86.2 percent above the most recent trough valuation 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 More: Equities Moved Through May With Mixed Signals