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Mixed performance on stock exchange

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KANYANGALA—We also revised listing requirements

Introduction of an automated trading system at the Malawi Stock Exchange (MSE) two years ago started paying off this year as, with no physical meeting for trading, the local bourse is poised to register growth in both traded value and volume.

The advent of the Covid-19 pandemic and a political impasse especially during first half of the year prompted investors to hold on to their money, which resulted in a slow in trading activity.

The gravity, however, was not experienced in the financial and commodities trading sectors among others.

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For example, during the first quarter of 2020, the local bourse transacted a total of 70,886,329 shares at K1, 822,662,767.45 in 761 trades representing a 83.15 percent drop in volume and 87.13 percent drop in value when compared to 420,679,180 shares transacted at K14,164,322,236.44 in the first quarter of 2019.

This transpired into a negative return on index witnessed by a downward movement of the Malawi All Share Index (Masi) from 30252.20 points registered onJanuary 1 2020 to 29176.23 points registered on March 31 2020.

In the second quarter, 179,323,974 shares were transacted at K6,758,007,139.49 whereas in the second quarter of 2019 the market transacted 206,786,591 shares at K15, 135,991,829.52. This reflected a 3.28 percent decrease in volume and a 55.35 percent decrease in value.

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However, the market registered a positive return on index with the Masi moving from 28857.39 points on April 1 2020 to 29784.70 points registered on June 30 2020, giving a return on index of 2.09 percent.

The trend continued in the third quarter when the market registered a positive return on index with Masi rising from 29784.70 points registered on July 1 2020 to 31743.36 points registered on September 30 2020, giving a return on index of 6.58 percent.

This was at the backdrop of transacting 551,047,767 shares at K12,385,612,653.56 in the quarter.

MSE Chief Operations Officer Kelline Kanyangala holds that the market performed exceptionally well in the year, having registered a 3.22 percent return on the Masi between January and November.

“Between January and November 2019 the return on the Masi was 0.8 percent and, when you look at overall market development, we had two listings—that’s Airtel Malawi plc and FDH Bank plc— which in total raised about K41.7 billion but at the same time, on the debt market, we had some listings; 16 government notes with a face value of around K651 billion.

“In terms of the regulatory environment, we also revised listing requirements and after input from the Registrar of Financial Institutions as well as the market players, we submitted the final draft to the Registrar and we are waiting for feedback from the Registrar,” Kanyangala said.

She said, during the period under review, the Capital Markets Association was formulated to help lobbying and have an integrated approach in information dissemination to the capital market sector.

Chief Executive Officer of Stock Brokers Malawi Limited Noel Kadzakumanja said the market could could have performed much better if not for the political impasse and Covid-19.

“I hope 2021 will be a better year. However, that will depend on management of the pandemic,” Kadzakumanja said.

Alliance Stockbrokers Limited Operations Manager Thokozani Saulosi said the market was partly affected by exogenous shocks.

He said 2021 is coming with mixed signals as the Covid-19 pandemic is still at play.

“There might be an increase in the volume of the shares but, then, the prices will be affected mostly in counters that are highly affected by the pandemic; so, the outlook is mixed,” Saulosi said.

One can only hope that such positive trends will be maintained.

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