NASI And NSE 25 Gain As NSE 20 Remain Unchanged

The equities market recorded a mixed performance, with NASI and NSE 25 gaining by 0.6 and 0.7 percent respectively, while NSE 20 remained unchanged during the week.

The performance in Equities took the YTD performance to gains of 17.4, 5.4, and 14.9 percent for NASI, NSE 20, and NSE 25, respectively.

The equities market performance was mainly driven by gains recorded by banking stocks such as KCB Group, Equity Group, and Standard Chartered Bank Kenya (SCBK) which gained by 2.3, 2.2, and 1.2 percent respectively.

The gains were however weighed down by losses recorded by stocks such as BAT, ABSA, and NCBA which declined by 2.4, 1.4, and 1.3 percent respectively.

During the week, equities turnover decreased by 12.0 percent to USD 13.7 mn, from USD 15.6 mn recorded the previous week, taking the YTD turnover to USD 740.7 mn.

Read More: Equities Embarked On An Upward Trajectory During The Month

Foreign investors remained net sellers, with a net selling position of USD 2.2 mn, from a net selling position of USD 1.3 mn recorded the previous week, taking the YTD net selling position to USD 28.4 mn.

The market is currently trading at a price-to-earnings ratio (P/E) of 12.8x, 1.3 percent below the historical average of 12.9x, 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 1.4x, 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 12.1x and a PEG ratio of 1.4x. The current P/E valuation of 12.8x is 65.7 percent above the most recent trough valuation of 7.7x experienced in the first week of August 2020.

Read More: A Look At The Performance Of Equities Market