The Malawi Stock Exchange (MSE) in May registered a 159.4 percent increase in share volume and a 73.58 percent increase in share value traded, published figures have shown.
In its May 2019 Monthly Market Performance Report, MSE said the market transacted 139 056 337 shares at K9 091 064 161.08 ($12 219 536.37) in 381 trades with an average daily turn-over of K432 907 817.19 ($581 882.68) compared to K249 394 880.09 ($339 479.42) in April 2019, reflecting an increase of 73.58 percent.
As compared to the previous month, the market transacted 53 606 240 shares at K5 237 292 481.94 ($7 129 067.84) in 348 trades.
Of the total shares traded, 13 000 000 Nico Holdings plc shares were traded as negotiated deals.
“Daily average share trades exhibited similar trends where the market registered an average daily volume of 6 621 730 shares compared to 2 552 678 shares traded in April 2019,” reads the report in part.
Market analyst and Cedar Capital Limited chief executive officer Armstrong Kamphoni said there is a likelihood that trading at the MSE could rise in the preceding months following the continued fall in interest rates, a development which has been pushing up demand for stocks.
“As interest rates are low, fund managers tend to look at the stocks as an alternative because the only reason you find more money in the market is because rates are quite high although short-term, but the returns are good. But as the returns come down because of falling interest rates, they start looking at longer term assets like property and shares as well.
“That effect is coming and we have seen some of it starting to develop. Because interest rates are low, the market will continue to rise based on demand because there is the weight of money argument, so, fund managers have to look for asset to put their money in. There is a good likelihood that the index will rise,” he said.
MSE chief executive officer John Kamanga told Business News that while it is too early to determine the impact of falling interest rates on the market, the local bourse outlook remains positive.
“With interest rates going down, it is very much positive to the stock market. With interest rates going down, there will be a portfolio shift into the capital market where the yields, in terms of capital gains as well as the dividend, could be higher. This gives comparative advantage to the capital market to look very attractive compared to the money market.
“As the rates go down, the capital market becomes lucrative in the sense that the yields are much better compared to the money market and that would lead to portfolio shift,” he said.