The equities market recorded mixed performance, with NASI and NSE 25 gaining by 0.9 and 0.7 percent respectively, while NSE 20 declined marginally by 0.1 taking their YTD performance to gains of 8.9,0.9 and 6.7 percent for NASI, NSE 20, and NSE 25.
The equities market performance was driven by gains recorded by large-cap stocks such as BAT, KCB Group, Bamburi, and DTB-K of 14.1, 3.9, 3.1, and 2.5 percent, respectively.
The gains were however weighed down by losses recorded by stocks such as EABL and NCBA Group which declined by 2.3 and 1.6 percent, respectively.
Equities turnover declined by 19.1 percent during the week to USD 22.1 mn, from USD 18.6 mn recorded the previous week, taking the YTD turnover to USD 149.6 mn. Foreign investors turned net sellers, with a net selling position of USD 2.5 mn, from a net buying position of USD 1.3 mn recorded the previous week, taking the YTD net buying position to USD 0.1 mn.
The market is currently trading at a price-to-earnings ratio (P/E) of 11.8x, 8.4 percent below the 11-year historical average of 12.9x.
The average dividend yield is currently at 4.3 percent, unchanged from what was recorded the previous week, and 0.2 percentage points above the historical average of 4.1 percent.
With the market trading at valuations below the historical average, we believe that there are pockets of value in the market for investors with a higher risk tolerance.
The current P/E valuation of 11.8x is 53.8% above the most recent valuation trough of 7.7x experienced in the first week of August 2020. The charts below indicate the market’s historical P/E and dividend yield.
Rates in the fixed income market have remained relatively stable due to the discipline by the Central Bank as they reject expensive bids.
The government is 13.3 percent behind its prorated borrowing target of 527.7 billion shillings having borrowed 305.6 billion shillings.
“In our view, due to the current subdued economic performance brought about by the effects of the COVID-19 pandemic, the government will record a shortfall in revenue collection with the target having been set at Kshs 1.9 tn for FY’2020/2021,” said Cytonn .READ: NASI, NSE 25, And NSE 20 Record Smiles During The Week More Articles From This Author
