Malawi’s stock market experiencing a recession

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The Malawi Stock Exchange (MSE) has released its monthly market report, which shows that trading on the local exchange declined in July, posting an average daily volume of 1,047,162 shares, compared to 7,391,068 shares traded in June 2021. During the month, trade activity decreased by 85.83 percent each day.

According to the data, the market traded 21,990,398 shares for a total value of K994, 831,445.53 in 298 deals, down from 162,603,497 shares for a total consideration of K4, 769,000,833.21 in 326 trade transactions in June. The Malawi All Share Index (Masi) rose to 36496.03 points from 35144.56.63 points in June, indicating a positive return on index for the market.

“This gives a month on month return on index of 3.85 percent. The price gains registered bIllovo at 20.81 percent, Airtelat 9.9 percent, FMBCH at 8.66 percent, Press Corporation Limited at 8.34 percent, TNMNational bank and Standard bank were enough to offset share price losses registered by NITLat 15 percent, Old Mutual at 4.11, NBS and FDH bank resulting into an upward movement of the MASI,” the statement reads.

According to Noel Kadzakumanja, Chief Executive Officer of Stockbrokers Malawi Limited, the Masi has risen since it is driven by price fluctuations on the counters rather than volume and value traded. “We should expect increased trades as some of big players are coming out of closed period, and as Covid situation is expected to get better,” Kadzakumanja said. Thokozani Saulosi, Operations Manager at Alliance Stockbrokers Limited, stated in a separate interview that Masi will climb when overall prices have grown in a specific period.

He stated that the market exhibits some seasonality characteristics, with activity peaking after businesses’ financial results are out, which works as a trigger in decision-making by fund managers, who are the market’s largest investors.

“We should expect lower volumes and values than April and May. However, this is not exhaustive as some month’s activity could pick up and the market registers high values and volumes,” Saulosi said. Part of the reduction in trade, according to MSE Operations Manager Kelline Kanyangala, is due to the seasonality component of trading activity patterns that have been seen throughout time.

“Looking forward, we are hopeful that activity should pick up once most companies start releasing half-year financial results. “However we are also aware of the downside risk posed by the Covid pandemic which, we have observed, causes a slowdown in activity when positive cases spike,” Kanyangala said.