Equities Market Registers Mixed Performance

During the week, the equities market recorded mixed performance with NASI and NSE 25 gaining by 0.1 and 0.4 percent respectively while NSE 20 declined by 1.4 percent.

The performance took the YTD performance of the three to losses of 23.1, 12.2, and 16.9 percent, for NASI, NSE 20, and NSE 25, respectively.

The equities market performance was mainly driven by gains recorded by banking stocks such as NCBA Group, Equity Group, and KCB Group of 6.6, 3.2, and 3.1 percent, respectively.

The gains were however weighed down by losses recorded by other banking stocks such as ABSA Bank of 3.9 percent while Co-operative Bank and DTB-K both declined by 1.7 percent each.

During the week, equities turnover increased by 154.3 percent to USD 13.2 mn from USD 5.2 mn recorded the previous week, taking the YTD turnover to USD 704.1 mn.

Additionally, foreign investors remained net sellers, with a net selling position of USD 5.8 mn, from a net selling position of USD 1.0 mn recorded the previous week, taking the YTD net selling position to USD 183.2 mn.

The market is currently trading at a price-to-earnings ratio (P/E) of 6.9x, 45.5 percent below the historical average of 12.6x, and a dividend yield of 6.1 percent, 2.0 percentage points above the historical average of 4.1 percent.

Key to note, NASI’s PEG ratio currently stands at 0.9x, an indication that the market is undervalued relative to its future growth.

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.

At the same time, during the week, liquidity in the money markets eased, with the average interbank rate declining to 5.0 percent from 5.1 percent recorded the previous week, partly attributable to government payments offsetting tax remittances.

The average interbank volumes traded declined by 6.1 percent to 29.8 billion shillings from 31.7 billion shillings recorded the previous week.

The yields on Eurobonds were on a downward trajectory, an indication of declining risk concerns over the economy. The yield on the 10-year Eurobond issued in 2014 declined the most by 1.1% points to 16.2% from 17.3% recorded in the previous week.