The 16-counter Malawi Stock Exchange (MSE) return on investment (RoI) in 2020 rose by 2.7 percentage points from 4.38 percent in 2019 to 7.08 percent, an analysis by investment and advisory firm Bridgepath Capital Limited shows.
RoI measures the gain or loss on an investment relative to the amount of money invested, and with the current figures, it means shareholders earned more than they realised in the previous year.
In an interview yesterday, Bridgepath Capital Limited chief executive officer Emmanuel Chokani linked the development to reasonable share price gains in some counters and the rise in pension funds money, which are in excess of K1 trillion.
He said: “Pension contributions continue to come in looking for a home. This is the main driver to the development.
“But other than that, Airtel Malawi plc, Standard Bank plc and FDH Bank plc share prices also went up significantly.”
Chokani said the Initial Public Offerings (IPOs) of Airtel Malawi plc and FDH Bank plc also helped to anchor a good performance of the shares market.
The year 2020 kicked off with the listing of Airtel Malawi plc in February and later on FDH Bank plc in August, which saw the companies raising K28 billion and K14 billion, respectively, pushing the total market capitalisation to K1.7 trillion
In 2020, the MSE performance was sluggish, a development that was anticipated due to the fact that business conditions were not good occasioned by a political impasse and the Covid-19 pandemic; 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.
But in Q3, the market was bullish though some companies recorded share price losses.
In an interview on the performance of the stock market in 2020, MSE operations manager Kelline Kanyangala said the market performed reasonably well, considering the challenges that were experienced in the 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 the listing of two companies on the bourse.”