Bittersweet side for MSE in 2020

The scale of the Covid-19 shocks did not spare the 16-counter Malawi Stock Exchange (MSE), a development that resultantly slowed down activity on the local bourse in the just-ended year.

Despite minimal market activity, the shares market also witnessed some major highlights that delighted for the market and investors.

In the year, MSE performance was sluggish, a development that was anticipated due to the fact that business conditions were not good; hence, companies were impacted negatively.

In the first quarter (Q1), for instance, the shares market registered a negative return on investment of -3.56 percent

The sluggish performance was reflected in the downward movement of the Malawi All Share Index (Masi) —the overall measure of local shares market performance—from 30 252.20 points registered in January to 29176.23 points in March, according to the market performance report for Q1.

Similarly in the second quarter (Q2), the market was bullish, registering a 2.09 percent return on the market index despite that it was lower than the 9.71 percent recorded in the same period the previous year.

But in the third quarter, the market was bearish as most of the companies recorded share price losses including FMBCH  at 19.97 percent, TNM  at 15.80 percent , Illovo Sugar (Malawi) plc at 14.81 percent , Press Corporation plc at 3.98 percent,  Mpico Limited at 3.92 percent, Nico Holdings plc  at 0.87 percent, NBS Bank plc at 0.31 percent  and National Investment Trust Limited at 0.01 percent.

In the year, MSE added FDH Bank on the list of counters in the banking sector and Airtel Malawi plc on the list of stocks in the telecommunications sector.

The listing of Airtel Malawi plc saw the company raising K28 billion in the process and FDH Bank K14 billion, ultimately pushing the total market capitalisation to K1.7 trillion.

The review period also saw the formation of the Capital Markets Association which, among others, seeks to enhance financial literacy and promote professionalism in the industry.

The MSE also reviewed listing and trading requirements on the local shares market, a move meant to protect investors, maintain fair, orderly and efficient market and facilitate capital formation.

The changes, among others, include a review of clauses which were contradicting the provisions of the Financial Services Act and Companies Act and minimum capital requirements for listing and enforcement of the listing requirements.

Stockbrokers Malawi Limited chief executive officer Noel Kadzakumanja observes that in 2020, the market faced more challenges than opportunities which limited its potential.

“For the period to November 30, the market performed better than last year in terms of return on index with Masi gaining more than it had gained last year. The market would have performed much better had it not been for the prevailing Covid-19 pandemic and the political impasse in the first half of the year,” he said.

Taking his turn, market and investment analyst Emmanuel Chokani, who is also Bridgepath Capital Limited chief executive officer, said the year was a mixed bag.

He said while returns were higher as of November 30 compared to last year, the returns were relatively lower. 

Said Chokani: “While Airtel Malawi, FDH Bank had significant share price gains since listing along with NBS Bank and Standard Bank, which also recorded significant gains, the market was dragged down by TNM plc, FMBCH, Sunbird and Illovo.

“Most of these companies TNM, Illovo and FMBCH have challenges which they are going through, which has impacted their share price performance,” he said.

Chokani observed that the economy overall has been impacted by  the Covid-19 pandemic, which we started to see in and around early this year and the political impasse coming from 2019, leading to the June 2020 elections.

“The business environment has been rather slow but probably started to pick later in the year. Businesses were navigating the twin threats from Covid-19 and also the political impasse. Post June 2020, political risk has improved and the health threat from Covid-19 has improved though risks still abound from potential second wave if any at all,” he said.

Minorities Shareholders Association secretary general Frank Harawa also described the year as a mixed bag.

“The year could have been much better as activity was bolstered with the new listings in the year, but the Covid-19 pandemic brought challenges on the market.

“Share prices on many of the listed counters fell beyond our expectation. This was also some news for concern in the year,” he said.

On her part, MSE operations manager Kelline Kanyangala said the stock market performed well, considering the challenges that were experienced in the ending year. 

She said: “We drifted from the prolonged political impasse and then landed on the shores of the global Covid-19 pandemic.

“Despite these challenges, there were quite some positive developments in the year, the highlight being two listings.”