Reserve Bank of Malawi sees strong stock market performance

By Taonga Sabola:

The Reserve Bank of Malawi (RBM) says it expects the country’s stock market to remain vibrant in the coming months.

The Malawi Stock Exchange (MSE) bank registered an improved performance during the first half of 2018, as reflected in index performance and activity.

In its latest Financial Stability Report, the central bank says the prevailing macroeconomic condition characterised by easing inflationary pressures, a stable policy rate and exchange rate is expected to continue fostering growth of the stock market.

It is, however, quick to note that companies are expected to bear increased operational costs emanating from use of alternative sources of energy due to continued intermittent power supply.

“Overall, companies are expected to perform better in the ensuing period. The expected improved performance of the listed companies and continued attractiveness of equity investments over money market investments, coupled with increased capital markets financial literacy awareness, will likely continue to push up share prices and increase market activity,” RBM says.

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During the first half of 2018, total market capitalisation of the MSE significantly declined by 87.08 percent to K1.370 trillion (US$1.89 billion) at the end of June 2018.

The decline in total market capitalisation was due to delisting of Old Mutual plc which, as at end December 2017 had a market capitalisation of K9.661trillion.

The domestic market capitalisation rose by 26.9 percent to close at K996.94 billion at the end of June 2018. The increase in domestic market capitalisation was due to increases in share prices on the 10 domestic counters.

The foreign market capitalisation declined by 96.19 percent to K373.80 billion at the end of June 2018 from K9.661trillion at the end of December 2017. This was again due to the delisting of Old Mutual plc.

MSE Chief Executive Officer, John Kamanga, recently indicated that the market expects an equity listing in the fourth quarter of this year.