The value of shares traded at the Nairobi Securities Exchange (NSE) jumped by almost 12 times in the first six months of this year on account of a sharp rise of prices and volumes traded at the bourse.

Investors bought and sold shares worth Ksh73.28 billion ($852.1 million) between the beginning of January and end of June this year compared to Ksh6.21 billion ($73.7 million) traded over the same period last year.

Volumes jumped by more than 10 times to 3.9 billion in the first six months, a period when share prices were on an upward trend, compared to 385.5 million traded over the same period last year.

The NSE 20 Share Index - which tracks the performance of the 20 most traded shares - crossed the 5,000 level in April, for the first time in more than four years, after the Supreme Court dismissed two petitions challenging the election of Uhuru Kenyatta as president.

Share prices in Nairobi however started trending downward from the beginning of June as foreign investors, who have been reacting to indications by the US Federal Reserve Bank that it could start scaling down on its quantitative easing (QE) policy, pulled back from frontier and emerging markets.

As a result, the NSE 20 Share and NSE All Share Indices closed the first half of this year having appreciated by 11.25 per cent and 22.61 per cent respectively, making the Nairobi bourse the third best performer in the region.

Kigali’s Rwanda Stock Exchange (RSE) emerged the best performer after the Rwanda Share Index, which tracks the performance of its two local stocks, closed 39.32 per cent up as at the end of the first half of this year.

Dar es Salaam’s Tanzania Share Index, which tracks the performance of 11 local stocks had appreciated by 28.64 per cent on the last day of the first half of this year while Kampala’s Local Share Index which tracks the performance of the bourses’ eight local stocks closed 15.79 per cent up, lagging the other three securities exchanges in the region.

“If you look at the Rwanda market, two stocks were among those in the region that benefited from the quantitative easing in the United States and they kept edging up. Most stocks in the region particularly liquid counters in the consumer sector did well,” said Vimal Parmar, head of equity research at Burbidge Capital.

The RSE, Uganda Securities Exchange, NSE and the Dar es Salaam Stock Exchange (DSE) have been beneficiaries of the US Federal Reserve Bank’s policy of buying back bonds to stimulate its economy.

The effect of the policy, which is also known as quantitative easing (QE), has had the effect of low interest rates and returns in developed markets which has made frontier and emerging markets attractive to foreign investors who have been some of the key drivers of the region’s equity markets.

In the month of June however, foreign investors pumped in Ksh2.602 billion ($30.25 million) keeping their participation strong despite fears arising from the risk of reduced liquidity in the US market if the Federal Reserve goes ahead and eases on the policy of buying back bonds.

Foreign investor inflows rose by 27.66 per cent to hit Ksh9.119 billion ($106.03 million) between the beginning of January and end of June this year compared to Ksh7.143 billion ($84.8 million) over the same time period in 2012.

The most traded stocks by foreign investors in the month of June were Safaricom, KCB Group, Equity Bank and East African Breweries.