The equities market recorded a mixed performance, with NASI and NSE 25 gaining by 1.5 and 0.8 percent respectively.
The NSE 20 declined by 0.7 percent, taking their YTD performance to gains of 19.2, 15.8, and 4.7 percent for NASI, NSE 25 and NSE 20, respectively.
The equities market performance was mainly driven by gains recorded by stocks such as Safaricom, Equity Group, Co-operative Bank, and KCB Group, which gained by 2.1, 2.0, 1.1, and 0.9 percent respectively.
The gains were however weighed down by losses recorded by stocks such as NCBA and Diamond Trust Bank (DTB-K) which declined by 3.1 and 1.9 percent respectively.
During the week, equities turnover increased by 64.2 percent to USD 22.5 mn, from USD 13.7 mn recorded the previous week, taking the YTD turnover to USD 763.2 mn.
Foreign investors turned net buyers, with a net buying position of USD 6.2 mn, from a net selling position of USD 2.2 mn recorded the previous week, taking the YTD net selling position to USD 22.2 mn.
The market is currently trading at a price-to-earnings ratio (P/E) of 12.93x, 0.1 percent above the historical average of 12.92x, and a dividend yield of 3.2 percent, 0.8 percentage points below the historical average of 4.0 percent.
Key to note, NASI’s PEG ratio currently stands at 1.5x, 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 12.0x and a PEG ratio of 1.4x.
The current P/E valuation of 12.9x is 67.9 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.