Equities were on a downward trend for the month of August, with NASI, NSE 20 and NSE 25 declining by 0.5, 6.1 and 1.7 percent, respectively, taking their YTD performance to gains/(losses) of 5.1, (12.9) and (0.8 percent), respectively.
Last week, markets also recorded a declining performance, with NASI, NSE 20 and NSE 25 declining by 1.5, 0.4 and 1.0 percent, respectively.
The decline in the NASI was largely due to declines recorded in large cap counters such as Safaricom, Diamond Trust Bank Kenya, EABL and Bamburi, which recorded declines of 2.6, 2.5, 2.0 and 1.7 percent, respectively.
Equities turnover declined by 26.5 percent during the month to USD 79.7 million, from USD 108.3 million in July 2019.
Foreign investors turned out to be the net buyers for the month, with a net buying position of USD 13.1 million, from July’s net selling position of USD 20.6 million.
For the week ended, quities turnover declined by 54.6 percent to USD 13.4 million, from USD 29.5 million the previous week, bringing the year to date (YTD) turnover to USD 958.8 million.
Foreign investors remained net buyers for the week, with a net buying position of USD 3.3 million, a 71.9 percent decline from last week’s net buying position of USD 11.6 million.
The market is currently trading at a price to earnings ratio (P/E) of 11.3x, 15.0 percent below the historical average of 13.3x, and a dividend yield of 5.3 percent, 1.5 percent points above the historical average of 3.8 percent.
With the market trading at valuations below the historical average, we believe there is value in the market.
The current P/E valuation of 11.3x is 16.5 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 36.1 percent above the previous trough valuation of 8.3x experienced in December 2011.
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