Market experts have said the Malawi Stock Exchange (MSE) is yet to fully recover from the impact of the business slowdown experienced during the greater part of the year due to Covid-19 pandemic as investor confidence is slowly being restored.
This comes at a time the local bourse registered an increase in both traded volume of shares and value despite registering a negative month-on-month return on index of –1.38 percent.
An October Monthly Market Report published by MSE on Wednesday shows that the market transacted a total of 659,979,164 shares at a total consideration of K13,075,408,794.09 in 237 trades.
This reflects a 280.19 percent increase in share volume traded and a 108.74 percent increase in share value compared to 173,592,463 shares transacted at a total consideration of K6, 263,997,275.34 in 321 trades in September.
“The market registered an average daily volume of 31,427,579 shares compared to 7,890,567 shares traded in September 2020, reflecting an increase of 298.29 percent.
“The average daily turnover for October 2020 was K622, 638,514.00 compared to K284, 727,148.88 in September 2020, reflecting an increase of 118.68 percent,” reads the report.
However, the report indicates that the market registered a negative return on index as reflected in the downward movement of the Malawi All Share Index (Masi) from 31743.36 points registered in September 2020 to 31303.78 points registered in October 2020.
In an interview, Operations Manager for Alliance Stock brokers Limited, Thokozani Saulosi, attributed the performance to transactions registered in some counters.
He, however, said this does not mean the market has recovered from the effects of the pandemic as evidenced by the negative month on month return on the market index.
“The pandemic affected the demand side of the market in a lot of counters due to negative company performances, as companies struggled during the pandemic, and further reduction in disposable income from the investors.
“However, this is also a sign that investors are now confident about future prospects of the market and especially the counters that have traded the highest in the month,” Saulosi said.
He added that they expected the volume and value of trades to be fairly higher than the months hit most by the pandemic but still expected the market index to close at a lower point than expected.
Stockbrokers Malawi Limited Chief Executive Officer, Noel Kadzakumanja, concurred with Saulosi on suggestions that the market was on a path to recovery.
MSE Chief Operations Officer, Kelline Kanyangala, said there had been an improvement in trading activity on the market during the month under review.
“This is encouraging for investors and the market as a whole especially when we look back to earlier this year when we saw quite suppressed trading activity owing to the spread of the Covid-19 pandemic which affected individual s ’ disposable income,” Kanyangala said.
Looking ahead, Kanyangala said she expected the trend to continue, especially as the year draws to the end and companies issue trading statements and investors rebalance their portfolios.