Share prices continued to dip on the Malawi Stock Exchange (MSE) with the 17-counter market recording a negative return in July-August amid persistent over supply of stocks as institutional investors limit their equity investment levels. Malawi Stock Exchange (MSE) data show that the Malawi All Share Index (Masi), the overall measure of market performance dropped … The post Shares continue to plummet on stock market, data show appeared first on Nation Online .
Share prices continued to dip on the Malawi Stock Exchange (MSE) with the 17-counter market recording a negative return in July-August amid persistent over supply of stocks as institutional investors limit their equity investment levels.
Malawi Stock Exchange (MSE) data show that the Malawi All Share Index (Masi), the overall measure of market performance dropped by about 6 200 points to register negative return of -1.24 percent as 11 counters registered share price drops.
RBM, MSE and other officials celebrate the listing CHL on August 10. | Nation
But the rate at which the shares plunged in August was reduced such that all the 11 counters lost less than three percent, with market analysts suggesting that most of the stocks are realising their equilibrium after months of price corrections.
The data further show that market capitalisation slightly improved from K27.5 trillion to K27.8 trillion, thanks to the Continental Holdings plc listing on August 10 which saw its K630 billion capitalisation cushioning the loss from the plummeting share prices.
Market analysts further say the continued tumbling of stocks is linked to recent changes in economic policies that forced institutional investors to offload some of their shares to comply with equity investment limits, thereby increasing supply.
In an interview on Tuesday, stock market analyst Brian Kampanje said pension fund managers and life insurers are still adjusting to the Financial Services Directive of 2025, which puts a regulatory cap for pension funds and life insurance investments in listed equities at 60 percent and this means disposal of excess shares by such institutions.
He said: “The central bank enforces these prudential investment guidelines to minimise contagion risk and encourage sector diversification.
“The other institutional investors have little appetite to mop up the available shares in the short-term, leading to dwindling market share price.”
Minority Shareholders Association of Listed Companies secretary general Frank Harawa said in an interview that the development has resulted in pension managers offloading more stocks that rarely attract demand, in the process dampening share prices and affecting market capitalisation.
He said: “This situation has created an awkward situation and risks weakening the market, which has been strong until 2025.
“These institutional investors are now looking to invest elsewhere such as in infrastructure at the cost of the stock exchange.”
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said that the continued over supply of shares could result in most stocks being bought at bargain prices, thereby pulling down the value.
He, however, said the situation is expected to improve in the coming months depending on inflation direction and exchange rate stability, highlighting that fiscal and monetary policies will remain key in the short to medium-term.
“While the fall in share prices is significant, it does not necessarily indicate a deterioration in the underlying fundamentals of all listed companies,” said Makwakwa.
Meanwhile, stock market investor Purity Chitalo observed that the price correction, which the MSE witnessed end last year and early this year, has resulted in some investors exiting the market.
MSE was established in 1994, but officially opened for business and equity trading on November 11 1996, when it first listed National Insurance Company Limited, now trading as Nico Holdings plc.
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