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Equities Market Post Mixed Performance As January Melts Away

BY Soko Directory Team · January 24, 2022 08:01 am

KEY POINTS

The market is currently trading at a price-to-earnings ratio (P/E) of 11.5x, 10.9 percent below the 12-year historical average of 12.9x.

KEY TAKEAWAYS

The equities market performance was driven by losses recorded by large-cap stocks such as Diamond Trust Bank (DTB-K) and Safaricom, of 1.7 and 1.1 percent, respectively.

The equities market recorded a mixed performance, with NASI and NSE 20 declining by 0.3 percent and 0.4 percent, respectively, while NSE 25 gained by 0.3 percent last week.

The performance, according to Cytonn Investments, took their YTD performance to losses of 1.5, 1.1, and 1.6 percent for NASI, NSE 20 and NSE 25, respectively.

The equities market performance was driven by losses recorded by large-cap stocks such as Diamond Trust Bank (DTB-K) and Safaricom, of 1.7 and 1.1 percent, respectively.

The losses were however mitigated by gains recorded by stocks such as Equity Group of 4.0 percent while BAT and Bamburi both gained by 2.0 percent.

Equities turnover declined by 1.5 percent to USD 13.7 mn, from USD 13.9 mn recorded the previous week, taking the YTD turnover to USD 44.5 mn.

Foreign investors remained net sellers, with a net selling position of USD 3.64 mn, from a net selling position of USD 3.65 mn recorded the previous week, taking the YTD net selling position to USD 4.0 mn.

The market is currently trading at a price-to-earnings ratio (P/E) of 11.5x, 10.9 percent below the 12-year historical average of 12.9x.

The average dividend yield is currently at 3.5 percent, 0.5 percentage points above 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.

The current P/E valuation of 11.5x is 49.5 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 Turnover Declined By 25.4% To USD 15.3 Mn From USD 20.5 Mn

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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