The Malawi Stock Exchange (MSE) showed signs of recovery from the impact of the Covid pandemic experienced in 2020 when it registered a positive return on index of 40.05 percent in 2021.
This represents a 32.97 percentage points increase when compared to 7.08 percent return on index recorded in the preceding year.
This is according to an annual market performance report published by the MSE on Thursday.
The report, however, indicates that the market registered a decrease in both volume of shares traded and total value traded compared to the corresponding period in 2020.
“In the year 2021, the market transacted a total of 1,301,122,424 shares at a total consideration of K37,690,252,891.52 in 3,304 trades. In the corresponding period 2020, the market transacted a total of 1,645,194,139 shares at a total consideration of K41,085,584,358.55 in 3,114 trades. This reflects a -20.91 percent decrease in share volume traded and a –8.26 percent decrease in share value traded,” the report reads.
In an interview, MSE Operations Manager Kelline Kanyangala described the performance as “really good” stressing that the return on index was above inflation.
She explained that the drop in volumes was due to the absence of equity listings in 2021 compared to 2020 when there were two equity listings saying whenever there is a new listing activity picks up.
“The return can be attributed to the improved performance of companies especially as we saw the economy opening up in 2021. However, there were quite a number of challenges faced in the year, notably being the absence of new equity listings on the bourse. The market is in need of new equity listings to provide an investment vehicle for growing pension funds. This remains a challenge we are committed to address.
“Indeed, we expected to have at least one equity listing during the year based on the progress we had registered with potential issuers. However due to events beyond our control, this failed to materialise. We will, however, continue with our strategy to pursue companies to list and, over time, results will show,” Kanyangala said.
“The outlook remains positive for the market. There are some exciting projects in the pipeline including the Capital Market Development Plan that is yet to be launched. We are aware that the Covid pandemic and its aftershocks continue to derail growth of the economy but we believe by and by things will improve,” she added.
Operations Manager for Alliance Stockbrokers Limited Thokozani Sauslosi concurred with Kanyangala, saying the current economic situation characterised by low liquidity, increased inflationary pressure and floating exchange rate which has seen the Kwacha lose value, were enough to deter the market from such a performance.
“Listed companies on both Domestic Share Index (DSI) and Foreign Share Index (FSI) have performed well as seen by the current trading statements which have led to demand in shares thereby leading to an increase in prices. This has led to increases in both the FSI and DSI.
“Liquidity levels coupled with non-remittance of pension fund money has affected the trade volume, hence reduced performance. The turnaround performances of Illovo and FMBCH have highly influenced the increase in Masi as demand for shares in these counters increased,” Saulosi said.
Stockbrokers Malawi Limited Equity and Money Market Dealer Kondwani Makwakwa said the slowdown in traded volume and value was because shareholders held on to their shares from the new listings of 2020 to benefit through dividends.