If there is one year the Malawi Stock Exchange (MSE) would love to forget, then 2016 could be one of them.
While celebrating 20 years of its existence, MSE’s performance in the year ending 2016 declined compared to last year.
During the first quarter of 2016, the bourse registered a negative return on investment of 7.8 percent compared to 3.21 percent registered in the first quarter of 2015.
Further, there was also a drop in both traded volume and value as the stock market transacted 9 693 004 shares at a total consideration of K295 million in 218 trades. During the corresponding period in 2015, the market transacted 40 439 832 shares at K675 million in 340 trades. The first quarter performance, thus, reflected a 76 percent decrease in terms of volume and a 56.2 percent decrease in value.
During the period, daily average share trades exhibited similar trends with the market registering an average daily volume of 156 339 shares compared to 652 255 shares traded in the corresponding first quarter of 2015.
The average daily turnover for the first quarter 2016 was K4 million compared to K10 million for the corresponding period 2015.
This was unlike in 2015 when the market, though bearish, registered a negative return on investment of -2.17 percent as compared to 18.79 percent registered in 2014, recorded an increase in both traded volume and value.
In 2015, the market transacted a total of 2.3 billion shares at a total consideration of K48 billion in 1 220 trades. In the corresponding period 2014, the market transacted a total of 1.7 billion shares at a total consideration of K10 billion in 1 673 trades, reflecting a 37 percent increase in terms of share volume and a 347.23 percent increase in value terms.
The highest sales in terms of volume and value was registered in April at a total of 1 606 464 275 shares and a total turnover of K31 billion.
In the third quarter of this year, the market traded 81 353 609 shares valued at K1.5 billion in 243 trades. During the corresponding period in 2015, the market transacted 315 278 942 shares at K7 billion in 285 trades. This reflects a 74.2 percent decrease in terms of share volume and a 77.5 percent decrease in share value.
Daily average shares trades also exhibited similar trends where the market registered an average daily volume of 1 312 155 shares compared to 5 o85 14 4 shares traded in the corresponding third quarter of 2015.
In his address to invited guests during the 20th anniversary celebrations of the MSE earlier this month, Reserve Bank of Malawi (RBM) Governor Charles Chuka noted that the local bourse has registered paltry growth on account of macroeconomic instability.
He said the local equity market’s subdued growth is contrary to the regulator’s expectations at the time it opened in 1996, observing that the economy has been slow in creating wealth because macroeconomic instability and stagnation in economic diversification.
Market analyst Nelson Mkwende, who is also manager at FDH Stockbrokers Limited, in an interview with Business News challenged markets analysts to play a part in attracting investors to existing investment avenues such as the Alternative Stock Market.
He said: “Going on the secondary market [main market], we find that it is difficult to convince people to list on that market yet it is a cheaper source of raising capital.”
Upbeat on 2017 was MSE operations manager Esnat Lweya who said the local bourse is set for strong performance on the back of a stabilising macroeconomic environment.
She said: “From the trading statements that are coming through, most companies are showing positive results. Looking at the performance of companies in 2014 as compared to now, there seems to be an improvement.”
Lweya said the local bourse is also hopeful that the awareness campaign it embarked on in the year to woo investors to the MSE will bear fruits.
Until April this year, MSE had 14 counters before Britam Insurance Company Limited delisted from the market. n