After several years of passive performance, the Malawi Stock Exchange (MSE) seem to have picked up in the year just about to end by registering improvements in share value and volumes.
In the past 11 months, macroeconomic variables that have traditionally impacted on the local stock market such as inflation and interest rates and a stable kwacha, performed well.
For instance, inflation rate has been on a downward trajectory averaging 12 percent in 11 months. In November, inflation rate was recorded at 7.7 percent and interest rates dropped from around 35 percent to an average of 25 percent.
It is only National Bank of Malawi Plc (NBM) that has lowered its base lending rate further to 23 percent following a cut in policy rate by Reserve Bank of Malawi (RBM) from 18 percent to 16 percent last week.
The kwacha has on the other hand remained stable since December last year trading at around K730 to a dollar.
In the first quarter of 2016, the local bourse registered an increase in trading activity when 37.4 billion shares changed hands, raising K727.6million.
But in the corresponding period last year, MSE registered a negative return on investment of 7.8 percent transacting, a total of 9.6 million shares at a total consideration of K295 million in 218 trades.
The good performance filtered in the third quarter of this year where the market also registered a positive return on investment of 26.3 percent compared to 4.71 percent in the third quarter of 2016.
In the quarter, the Masi inched upwards from 15 772.51 points recorded on July 1 2016 to 19 920.42 points recorded on September 2017.
But in the same period last year, the market transacted a total of 81 353 609 shares at a total consideration of K1.5 billion in 243 trades.
Other than the gains in the year, a number of corporate actions and transactions notably the listing of FMB Capital Holdings.
FMB, which has been trading on the MSE since 2006, bid farewell to the stock market this year to pave way for FMBCH which is dual listed in Malawi and Mauritius.
African Alliance Securities Limited chief executive officer Armstrong Kamphoni said the new listings on the stock market came with a lot of publicity which made the market visible and attracted interest from investors
“When there are corporate actions on the stock exchange, a lot of interest is drawn from the investing public. For instance, the restructuring of these two companies drew excitement from investors,” he said.
Minority Shareholders Association secretary Frank Harawa described the ending year as best in decades.
“MSE listed counters recorded impressive movement in terms of share prices, for instance, Blantyre Hotels Limited, FMBCH, Mpico Plc and TNM Plc which is a clear signal that the stock market has become the best place for investment,” he said.
Harawa, however, bemoaned the small number of listed companies despite promises and symposiums held by the stock market to woo investors to list.
“Going forward, we want to see more players coming on the stock market. What we have seen and continue to see is that people have few options on where to invest and in the end they invest in companies that are not doing well just for the sake of investing.
“We are, however, hoping for another good year ahead for the stock market,” he said.
MSE operations manager Esnat Chilije cited infrastructure challenges such as the intermittent power supply which continues to negatively affect business operations.
She, however, said improvements in macroeconomic performance indicators during the year have had a positive bearing for the capital market performance.
“Inflation and interest rates have declined while the exchange rate has been largely stable creating conducive environment for business operation.