Economic situation affect share trading

The Malawi Stock Exchange (MSE) has attributed the local bourse’s poor performance in the first quarter of the year 2016 to poor economic environment that affected incomes and businesses in the country.

A latest performance report from MSE shows that the market was bearish in the first three months of the year as it registered a negative return on investment of 7.85 percent and a drop in both traded volume and value.

The market transacted a total of 9, 693, 004 shares in the quarter at a total consideration of K296.8 million in 218 trades, compared to a total of 40, 439, 832 shares transacted during a similar period last year, realizing K675.4 million in 340 trades.

This represents 76.03 percent decrease in terms of share volume traded and a 56.20 percent decrease in share value traded.

In an interview in Blantyre on Tuesday, MSE director of operations, Esnart Lweya, said the bourse has operated in difficult economic conditions at the beginning of the year which have affected both the investors and listed companies on the stock market.

“If you look at the economic fundamentals; the kwacha has more or less depreciated against all other major currencies,” said Lweya.

“And if we take into consideration the high inflationary environment and the high interest rate, you can see how the companies listed on the market were affected,” said Lweya.

She said the high inflation rate also affected consumer’s purchase power and spending ability, hence reduced buying of shares on the stock market.

Lweya said, however, there is hope for a stable environment going forward attributed to recent trends which, she said, should in turn also influence positive performance on the market.

“I wouldn’t paint a gloomy picture for the entire stock market performance for 2016. We are seeing some of the economic fundamentals improving; the currency is appreciating and the tobacco market’s opening is equally going to filter in some foreign currency,” she said.

“Even in terms of inflation, with the harvesting season, we should expect some improvement. And these factors are likely to influence positive performance of the market,” said Lweya.