Malawi Stock Exchange (MSE) listed firms need to take a business-unusual approach to counter and mitigate extreme revenue losses amid Covid-19 shocks, a local investment and advisory firm has said.
Cedar Capital Limited chief executive officer Armstrong Kamphoni in the firm’s review report on Covid–19 crisis said while the impact the Covid-19 crisis on listed companies will be different, investors should look out for opportunities that will certainly arise in view of the Covid-19 pandemic.
According to the firm physical supply chains are far less significant for banking entities than for companies in other sectors, however given that manufacturing companies which are recipient of loans and advance, will be affected by production and distribution interruptions, credit quality, may deteriorate.
Kamphoni tipped: “Banks need to incentivise the performing customers by, say, reducing rates. This will not only ensure sustainability of those borrowers but also enable the bank to have some revenue to meet its costs and thus preserve capital. Banks may also look to bridging finance which will be hard to come by since every economy is affected.”
He notes that in the event of a lockdown, real estate may be hit hard as commercial tenants may not be able to trade.
“This should not be time to raise rentals but an incentive to those tenants who are able to stay on,” said Kamphoni.
The advisory firm argues that for wholesale and retailers, who are in a more difficult situation as they mostly rely on walk in customers, this should be a time for them to develop online trading platforms and door deliveries.
“This is easier said than done in a country that does not have door step addresses. This may only help the sales side but the supply chain disruptions will affect them as well. They will need to clear out perishable goods by obviously discounting them and reduce expenses which might unfortunately mean staff layoffs,” he said.
However the Covid-19 environment, according to Kamphoni, is expected to be much friendlier or even enhance the fortunes of mobile network operators in the short term before they succumb to the general economic turndown in the long run.
“In the first instance, a lockdown and working from home culture portends higher growth in data usage and increased minutes of use on voice,” said the firm.
Meanwhile, some listed counters have projected a tough year in view of the Covid-19 due to market turmoil caused by the Covid-19.