MSE share prices, market capitalisation drop—report

The Malawi Stock Exchange (MSE) market capitalisation marginally dropped as share prices dipped, leaving the local bourse in negative return on index in April.

An MSE Monthly Performance Report for April 2024 shows that the market closed the month in negative return of -0.008percent in dollar terms or -0.16 percent in kwacha terms, reducing the market capitalisation from K6.18 trillion (about $3.5633 billion) to K6.17 trillion (about $3.5630 billion).

The report indicates that four counters, namely NBS Bank plc, Icon Properties plc, Nico Holdings plc and Mpico plc plummeted during the month despite nine companies registering share price gains that could not offset the losses.

Reads the report in part: “The market registered a negative month-on-month return on index of -0.008 percent in US dollar terms [-0.16 percent in kwacha terms], but a positive year-to-date return of 2.95 percent. The market, however, registered an increase in both total traded value and volume of shares.”

The overall market indicator, Malawi All Share Index, plunged from 114 236.98 points in March 2024 to 114 228.31 points in April 2024, thereby giving a negative month-on-month return on index.

In an interview on Wednesday, an equity investment analyst Kondwani Makwakwa attributed the MSE’s performance to imbalances between sellers and buyers on the market as investors bought more shares when companies’ financial results were attractive.

He said: “Firstly, individual investors who had purchased shares earlier at lower prices in anticipation of favourable results may opt to sell to secure profits on stock.

“Secondly, institutional investors might be engaged in portfolio rebalancing activities to adjust their investments in line with the desired asset allocations or risk profiles.”

Makwakwa said companies’ performance in the first half of this year will determine the likely trajectory of the market.

“If they do well, the market will probably keep getting better. Smart investors can take advantage of this by making investments that could grow as the market improves,” he said.

MSE chief operations officer Kelline Kondowe said one of the factors that results in high supply of shares on the market is high interest rate environment which makes investors to opt to liquidate their equity investments and shift their portfolio towards the money markets.

She said the outlook remains challenging and that could negatively affect the performance of the market in terms of performance of the companies and participation on the market by retail investors, whose disposable income has been eroded by high inflation.

“However, when we consider the long-term, we remain optimistic that the stock market will continue to deliver solid returns for investors,” said Kondowe.

On the other hand, the market’s trading activity increased as 80.48 million more shares exchanged hands, raising K8.99 billion in 1 055 trades. This is a jump from 20.31 million shares traded at K3.56 billion in 753 trades in the previous month.