The Rwanda Stock Exchange (RSE) has emerged the best performer among East Africa’s four equity markets through the first six months of this year, which were characterised by strong foreign investor interest in the region’s stocks, falling interest and inflation rates.

The Rwanda Share Index, which tracks the performance of its two local stocks, had risen by 39.32 per cent as at the close of business on Thursday last week, a day before the close of the first half of 2013, as compared with the start of the year.

The Dar es Salaam Stock Exchange (DSE) came second after the Tanzania Share Index, which tracks the performance of 11 local stocks closed 27.75 per cent up, beating Nairobi’s All Share Index, which tracks the performance of all stocks in the region’s largest equity market. Nairobi’s All Share Index closed 21.58 per cent up.

Kampala’s bourse lagged in the regions equity markets after the Uganda Securities Exchange’s (USE) Local Share Index which tracks the performance of the bourses’ eight local stocks closed 19.44 per cent up.

“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.

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Shares of brewer and soft drink maker Bralirwa, emerged as the best performing counter in the region after its price rose by more than two and a half times to close at Rwf865 ($1.37) on Thursday from Rwf330 ($0.52) on the last day of trading last year while Bank of Kigali’s share price had increased by 51.97 per cent.

Although Kigali’s bourse has been the best performing in the region, other bourses particularly Nairobi Security Exchange (NSE) offer more options for investors because they have a higher number of stocks some of which are easier to trade than those at the RSE.

Frontier markets like the RSE, USE, 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, 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.

Mr Parmar said the outlook for the second half would be determined by local factors such as the way governments would finance their budgets, the way the International Criminal Court cases against Kenya’s President Uhuru Kenyatta and Deputy President William Ruto particularly for Kenya would be handled.

The second best performer in the region was AccessKenya whose share price had more than doubled to Ksh9.55 ($0.11) from Ksh4.40 ($0.05) at the beginning of this year before it was suspended pending the outcome of a takeover bid from South Africa’s Dimension Data.

This was followed by KenGen whose share price rose by 75 per cent, Tanzania’s CRDB Bank whose price closed at Tsh260 ($0.16), 73.33 per cent increase from Tsh150 ($0.09) its opening price at the beginning of this year the Nairobi bourse listed Centum Investments (70.04 per cent).

Moremi Marwa, chief executive officer of DSE said foreign investor participation at the Dar es Salaam bourse had jumped to 47 per cent as at the end of the third week of June compared with a partly 14 per cent over the first six months of last year.

He said there was an increase in shareholders’ value, market turnover and foreigners participation particularly between April and June with the main motivation being good results reported by listed companies for the period ended December last year.

“Going forward in the second half of the year, we envisage a similar level of interest and activity cemented by anticipated good fundamental performances by listed company following good economic growth prospects, falling inflation and manageable interest rates,” said Mr Marwa.

Data from the NSE shows that foreign investors whose participation stood at 42.41 per cent in May had in the first five months of this year made purchases worth Ksh31.8 billion ($377.9 million) and sales worth Ksh25.2 billion ($300.5 million).