The 16-counter Malawi Stock Exchange (MSE) market capitalisation has weakened by K100 billion or 0.7 percent midway in the second quarter (Q2), in a move analysts attributed to investor caution spurred by profit-taking.
Market data shows that the market capitalisation has slightly dropped from K15.86 trillion on April 1 to K15.75 trillion on May 16, as some shares dropped, affecting the Malawi All Share Index, which lost 2 200 points.
During the corresponding period in the second quarter of 2024, the market capitalisation gained 6.4 percent from K6.1 trillion to K6.5 trillion, which means it almost tripled within 12 months.
Some of the companies that experienced share price drop during the period include FMB Capital Holdings plc from K1 374.48 to K1 114.62, NBS Bank plc from K347.89 to K342.63, FDH Bank plc from K315.19 to 314.06 and TNM plc from K24.92 to K23.00.
In an interview on Tuesday, stock market investor Brian Kampanje described the development as a cooling off period of the market as stocks have lost some momentum though share prices have not significantly plunged.
He said: “While it is a perennial trend that share prices drop a bit in April every year as some retail investors try to balance their investment from shares into agro-produce, this year seems to be elevated because there was significant increase in the share market prices across several counters such that significant capital gains were made in the first quarter.”
However, Kampanje said the situation is temporary as the increasing number of investors willing to offload shares resulted in oversupply of shares, leading to marginal decrease in the stock prices, a scenario likely to change from June.
“One important factor to note is that there is no real capital loss for many investors who have held shares for at least a quarter of the year. Perhaps the speculators looking for short-term holding might be the ones to be concerned.
“Those looking for long term investment opportunities will surely make huge capital gains by the third quarter of 2025,” he said.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa on Tuesday attributed the market capitalisation drop to cautious investors who are desperate to sell for profit-taking, but expects the capitalisation to recover by next month.
He said: “The recent pull-back in market capitalisation signals growing investor caution, likely spurred by profit-taking and persistent macroeconomic headwinds, especially inflation, which are prompting more selling.
“Limited market liquidity has amplified the effect, as larger sell orders are harder to absorb, pushing prices lower and dragging down the Masi [Malawi All Share Index].”
Kampanje said investors will focus on next month’s trading statements announcements, adding that these disclosures will shape sentiment and help determine whether the market regains momentum or continues to drift sideways in the near term.
MSE chief executive officer John Robson Kamanga was not immediately available for comment, but he is on record as having described the market growth as highlighting the strength, resilience and potential of the country’s capital market as a platform for creating sustainable wealth and fostering economic growth.
MSE was established in March 1995 and opened for business on November 11 1996 with National Insurance Company of Malawi Limited, now Nico Holdings plc, as the first counter to list.
