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Business as usual on stock market

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KONDOWE—We need the support of everyone

The Malawi Stock Exchange (MSE) continued to be perceived as a platform for investment for the elite, leaving out millions of others due to lack of awareness.

Stakeholders are always thrilled over increases in the return on investment, a rise in the Malawi All Share Index (Masi), increases in share prices or when the government is raising funds through debt instruments.

But to most that are out of the equation, all this makes little or no sense at all.

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In recent years, the only activities that attracted the interest of a larger section of the society were the listing of Airtel Malawi Limited and FDH Bank in 2020.

These activities attracted pomp as members of the general public were made aware and encouraged to participate through messages they received on their mobile phones.

Instead of building from such activities and bringing more companies through listings while enticing more people to invest through the market, the MSE slowly went back to its state before 2020; thus, listing and investor drought.

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Nevertheless, the market registered a 31.8 percent return as of end November 2022, above the inflation rate, which signifies a good year for the investors as they have been able to earn a positive real return on investment.

Furthermore, the market managed to list 21 Government debt securities with a face value of K1.12 trillion, a significant step towards deepening the debt market in Malawi.

The listing brings the total number of listed debt securities to 62. However, secondary trading needs to be encouraged further, illuminating initiatives stipulated in the Malawi Capital Market Development Plan.

Recalling performance of the market in the year, MSE Chief Operating Officer Keline Kondowe said the significant challenge remained the absence of equity listings on the market.

“There are quite a number of areas that need to be improved on. We know that generally, financial literacy levels in Malawi remain low and that is reflected in the low levels of participation on the market despite the good returns. So, awareness is an area that we are working on.

“We believe that when it comes to issues of raising awareness, we cannot do it alone. We need the support of everyone including the media and other capital market players,” Kondowe said.

Stockbrokers Malawi Limited believes the MSE performed above expectation in 2022, considering volatility of the economy.

Stockbrokers Malawi Limited Chief Executive Officer Noel Kadzakumanja said a volatile economic environment characterised by among other challenges rising inflation, devaluation of the Kwacha, foreign exchange scarcity, unreliable power supply and fuel shortages was a tough environment for the market.

“We saw the market’s all-share index gaining amidst increase in value of shares traded and number of transactions processed. There have been no new listings for shares during the year but looking at how resilient the market has been this year, there are more prospects of the market doing better in 2023 largely because it is expected that the local and world economy will be recovering,” Kadzakumanja said.

The year birthed a group of minority shareholders called Minority Shareholders Association of Listed Companies.

The association’s General Secretary Frank Harawa reiterated the need to clear the misconceptions that people have about the market and increase the number of listed companies to make it more vibrant.

He said there are a lot of foreign companies who are compelled by law to list on the market in regard to the number of years they have been operational in Malawi but are let scot free.

“Further, we want to see issues of corporate governance in listed companies taken seriously, for example, companies should be able to circulate financial statements before the annual general meeting for effective participation of all shareholders,” Harawa said.

There is a need to enforce actions that will improve the state of the local bourse than the rhetoric that has stifled its growth over the years.

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