Malawi’s money market attracts investors

The attractive yields on Malawi’s money market peaking at a high of 22 percent has shifted investors’ focus from the stock market, but analyst argue the shares markets remain a good investment avenue.

The Reserve Bank of Malawi (RBM) has since April raised the bank rate—the rate at which commercial banks borrow from the central bank—twice and the rate is now at 21 percent, a development that has made the money market to be attractive.

“The recent increase of the bank rate from 16 percent to 21 percent has really triggered a shift of attention of some notable investors from the stock market to the money market, which is offering attractive rates. The stock market nevertheless remains a good investment avenue to institutional players who are constantly making enquiries on possible offers on counters that look more or less blue chip,” said Nelson Mkwende, acting manager at FDH Stockbrokers Limited.

He, however, said institutional investors mostly take a long term view of their respective investments and the stock market cannot be ignored in this regard.

At the treasury bills (T-bills) auction on July 24 2012, the average yield on the 91 days T-bills tenor decreased by 0.20 percent from 19.32 percent to 19.12 percent with 182 days T-bills and the 364 days T-bills at 19.40 percent and 22.96 percent respectively.

In the week ended July 27 2012, the market registered ‘thin’ trading activity on five counters, namely; Blantyre Hotels Limited (BHL), Illovo Sugar (Malawi) Limited, National Bank of Malawi (NBM), NBS Bank and Nico Holdings Limited.

A total of 4.47 million shares changed hands during the week with NBM accounting for 98 percent of all trades at 4.42 million shares, according to the Malawi Stock Exchange (MSE) weekly report.

But Mkwende explained that NBM trade was an internal re-organisation of funds by one institutional investor; hence, no price movement.

In the week, the MSE raised K252.4 million ($908 380.48) in 10 deals.