Nairobi — As signs of "green shoots" in the economy appear, workers' earnings could receive a boost in 2010 and reignite interest in equity investments.

This is especially so since valuations are at a historic five-year low, says leading fund management company AIG Investments.

Releasing their Third Quarter, 2009 Financial Markets Review last week, the fund managers noted that the Ugandan stockmarket fell by 3.9 per cent, largely due to a decline in cross listed stocks.

The Dar es Salaam Stock Exchange also dropped, but mainly due to profit taking.

In Kenya, the stockmarket weakened in Q3 after recording some gains in Q2 of 2009.

The volume of shares traded during the period declined to Ksh825.9 million ($10.6 million).

The value of shares traded also dropped from Ksh14.3 billion ($183 million) in Q3 2008 to Ksh9.8 billion ($126 million) in Q3 2009.

Despite the lower activity, foreign participation in the local equities market increased and constituted between 60 per cent and 78 per cent of the turnover for July and August.

However, in September, this reduced to around 53 per cent.

"It was difficult to clearly assess the reason for the drop, but it may be due to foreign interest in the fixed market," said senior investment manager Edward Gitahi.

The AIG-27 share index was down 3.4 per cent for the quarter while the Nairobi Stock Exchange All-Share and 20 Share Indices fell by 5.3 per cent and 8.5 per cent, respectively.

The banking sector first half financial results reflected a tough economic environment.

Profit after tax for the listed banks grew by a modest 7 per cent, compared with 48 per cent in 2008 over the same period.

Earnings from the non-financial sector, especially for cement companies, showed positive growth despite the current economic conditions boosted by a boom in the urban housing market and rising infrastructural spending.

Results from the ICT sector were less impressive, owing to increased depreciation of capital expenditure on rolling out the fibre networks and higher financing costs as the industry geared towards taking advantage of the new bandwidth from fibre-optic cables.

Over the past three months, the government borrowed Ksh30 billion ($385 million) from the domestic market, in line with the programmed borrowing of Ksh110 billion ($1.4 billion) for the financial year. There also appears to be increased appetite from corporate insurers.

The government securities market was active, both at the primary and secondary market level.

In the primary market, CBK offered Ksh34 billion ($436 million) attracting bids worth Ksh38 billion ($487 million).

CBK deepened the capital markets with the introduction of a one-year Treasury-bill.

The inaugural issue attracted significant investor interest with Ksh 17.3 billion ($222 million) going for the Ksh 8.5 billion ($109 million) offer.

In Uganda, the market declined by 3.9 per cent in Q3 as stock prices of most domestic and cross-listed counters remained depressed.

For the nine-month period, the market was up by 1 per cent.

At the Dar Stock Exchange, the performance declined over the quarter with the All-Share Index falling 0.8 per cent while the Domestic Share Index fell 2.7 per cent.