Share prices continue to plunge on the 16-counter Malawi Stock Exchange (MSE), resulting in the local bourse recording negative return on index of -1.53 percent last week.
The situation, according to the Market Monthly Performance Report for January 2026, drifted the market into the negative territory from a positive return of 29.9 percent the previous week.
The report further shows increasing volume of traded shares with low value, indicating that most sellers were desperate to sell their stocks even at reduced prices, a situation analysts say is influenced by market uncertainty following the introduction of capital gains tax.
Reads part of the report: “The market transacted a total of 34.86 million shares at a total consideration of K8.37 billion in 4 225 trades in the month of January 2026.
“In the previous month of December 2025, the market transacted a total of 25.27 million shares at a total consideration of K15.38 billion in 3 260 trades.”
The report said this represents a 37.95 percent increase in terms of share volume traded and a –45.58 percent decrease in share value traded.
Daily average share trades exhibited similar trends where the market registered an average daily volume of 1.66 million shares compared to 1.20 million shares traded in December 2025, reflecting an increase of 37.95 percent, according to the report.
Out of the 16 listed companies, 13 registered share price losses with only two Sunbird Tourism plc and Illovo Sugar (Malawi) plc registering share price gains.
In an interview on Sunday, Minority Shareholders Association of Listed Companies secretary general Frank Harawa said the situaiton is a result of market uncertainty following the introduction of capital gains tax.
He said: “Despite some companies declaring good dividends, the shares continue to fall. This is not market correction this is shareholders cashing out because of the punitive capital gains tax.
Harawa said the Ministry of Finance, Economic Planning and Decentralisation has not clarified on the future of the capital gains tax and how it is to be implemented.
“Such silence is not doing good for the market because it has brought alot of uncertainty,” he said.
In a separate interview, market analyst Brian Kampanje said there is panic selling of the shares in view of the uncertainty brought by capital gains tax.
He said: “The tax has not been implemented yet as there are technicalities to decide the tax base, the fine-tuning of the trading platforms and central securities depository to be able to know how taxes are to be determined.
“It is a complex undertaking, which retail investors are not comfortable with. Some institutional shareholders such as pension funds and life assurance schemes are already burdened by the need to limit investments in particular asset.”
Kampanje said this is increasing pressure to sell shares leading to oversupply on the local bourse; hence; dampening the hype among potential minority shareholders who are now considering other investment avenues.
On his partk, stock market investor Benedict Nkhoma said while the capital gains tax has an impact on the current situation, such market dynamics are normal.
He said: “Higher traded volumes and more transactions suggest that price discovery is active and investors are repositioning and not exiting the market.
“The increase in selling is largely strategic, driven by recent announcement in capital gains tax.”
Nkhoma said markets do not move in straight lines, adding that short-term corrections are necessary for sustainability.
“The key signal is that investors are still engaging with the market, which underpins confidence going forward,” he said.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said the current situation provides opportunity for long-term investors who could accumulate shares at low prices.
“This phase may present opportunities for long-term investors. As prices adjust and valuations become more attractive, disciplined investors who focus on fundamentally strong companies can gradually accumulate shares at more favourable levels,” he said.
Stock market investor Purity Chitalo said the current situation should make authorities reconsider removing the capital gains tax to enable the market to bounce back.
“The increased trading volume and transactions amid selling pressure suggest investors might be cashing out, possibly due to uncertainty around capital gains tax. If the proposed taxes are reconsidered, the market could bounce back,” he said.
In the Mid-Year Budget Review Statement presented in Parliament last November, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha announced a number of tax reforms, including the 30 percent capital gains tax.
The tax applies on all share disposals despite the length they have been held unlike in the past where shares held for more than one year were being exempted from the tax.
