The Malawi Stock Exchange showed signs of a slow start in the first week of trading of 2024 where 1.8 million shares were traded at a total consideration of K334.3 million.
This signifies an astronomical fall in the number of shares traded in the week as 15.1 million shares were traded during the same period in 2023, valued at K312.6 million.
The development culminated in market capitalisation reaching K6.03 trillion against K3.3 trillion recorded in the first week of trading in 2023.
In an interview, Stockbrokers Malawi Limited Equity and Money Market Dealer Kondwani Makwakwa said the trend was expected as most people usually have a number of commitments in the first month of the year.
The performance, according to Makwakwa, was also partly worsened by the 44 percent devaluation of the Kwacha in November 2023.
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He attributed the decline in number of shares traded to reduced liquidity of investors due to either economic hardship as they were adjusting living standards or low level of disposable income for immediate investment.
“The outlook is promising. Investors will still consider the stock market as the best investment option considering that the year 2023 helped a lot of retail investors weather the storm of the current economic environment, hence and this may trigger demand for shares.
“Furthermore, the good trading statements that were posted by the companies in December 2023 show that most of them will post an increase in profitability, which is enticing to investors,” Makwakwa said.
Capital market analyst Bond Mtembezeka said the opening performance is normal considering market trends.
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He said on the part of holders of stock, the year has just begun; therefore, most players are taking a cautious approach, trying to align their plans for the year, and for protecting investors as the market experienced a correction and, in that scenario, buyers tend to hold off on hopes that prices will dip further.
In a separate interview, economist Marvin Banda said the stock market is experiencing jarring effects of the November devaluation.
He said the nominal figure has increased because value is subjective and market psychology usually prevails.
“The stock market will begin to pick up in the traditional manner. The start of the year is usually a lean time financially due to our nation’s investment schedule, where agriculture takes precedence during the rainy season,” Banda said.
