Malawi Stock Exchange (MSE) Chief Executive Officer John Kamanga has said the recent 44 percent devaluation of the Kwacha will bring about mixed outturns on the local bourse in the short to medium terms.
In an interview on Tuesday, Kamanga said the adjustment of the local unit could be lucrative for foreign portfolio investors which in turn will increase demand for shares and lead to price gains.
But he said the devaluation would erode some gains registered by the stock market and in some counters.
He, however, remained optimistic that the return on investment will remain above inflation.
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“The devaluation means there has been loss of value on assets because if it is converted into the hard currency, it is not the same in value and it may affect existing portfolio investors.
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But market analyst Bond Mtembezeka believes the post-effects will remain enormous.
Mtembezeka said devaluation always results in exchange rate losses for listed companies, adding that the magnitude of those losses is determined by the level of exposure on each entity.
“The second effect is that devaluation, especially in net importing economies like Malawi, results in weakened real incomes of economic agents and this impacts their investment decisions in markets and the stock market is one such market,” Mtembezeka said.
The Malawi Stock Exchange has 16 counters from different sectors including banking, hospitality, telecommunications and manufacturing.
