The equities market performance was driven by losses recorded by large-cap stocks such as KCB, Safaricom, and EABL of 4.5, 3.2, and 1.9, respectively.
During the week, the equities market was on a downward trajectory, with NASI, NSE 20, and NSE 25 all declining by 2.2, 0.4, and 1.7 percent, respectively, taking their YTD performances to gains of 8.4, 0.7, and 7.6 percent for NASI, NSE 20 and NSE 25 respectively.
The equities market performance was driven by losses recorded by large-cap stocks such as KCB, Safaricom, and EABL of 4.5, 3.2, and 1.9 percent, respectively.
The decline was however mitigated by gains recorded by ABSA and BAT, which gained by 4.3 and 1.8 percent, respectively.
The equities turnover increased by 138.1 percent to USD 53.1 mn, from USD 22.3 mn recorded the previous week, taking the YTD turnover to USD 1.1 bn.
The sharp increase in turnover could be attributed to investors selling off their Safaricom shares due to uncertainty from the ongoing conflict in their Ethiopian market.
Safaricom was the most actively traded stock during the week, accounting for 71.1% of the total turnover in the market.
Foreign investors remained net sellers, with a net selling position of USD 23.4 mn, from a net selling position of USD 2.9 mn recorded the previous week, taking the YTD net selling position to USD 62.3 mn.
The market is currently trading at a price-to-earnings ratio (P/E) of 12.1x, 6.8 percent below the historical average of 12.9x, and a dividend yield of 3.5 percent, 0.5 percentage points below the historical average of 4.0 percent.
Notably, this week’s P/E is the lowest it has been since April 2021. 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 which is currently 60.1% of the market, the market is trading at a P/E ratio of 11.6x and a PEG ratio of 1.3x.
The current P/E valuation of 12.1x is 56.6 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.