The private sector has attributed the doubling of the Malawi stock market turnover to sound macro-economic policies which President Peter Mutharika has been implementing.
The stock market has registered a turnover of K13.5 billion in 2017, up from K6.2 billion which the market registered in 2016.
The Malawi Stock Exchange (MSE) has attributed the impressive turnover to improvement in macro-economic indicators.
MSE Operations Manager Esnat Chilije has cited stable exchange rate and the declining inflation rate and interest rate as having created ‘a favourable environment for business prosperity and sound performance of the stock market”.
Chilije explained that most of the companies listed on the stock market indicated good performance in their end of year 2017 trading statements.
Some of the companies on the MSE include Press Corporation, MPICO Limited and TNM.
The profit for Press Corporation has grown with 90 per cent in 2017 more than their profit in 2016.
Malawi Property Investment Company (MPICO) expects to register 100 per cent profit growth in 2017.
Telecom Network Malawi (TNM) is expecting a 60 per cent phenomenal profit growth.
Armstrong Kamphoni, Chief Executive Officer for African Alliance, a continent-wide investment banking group, said the impressive MSE results were an indication of increased activity on the stock market.
He said this shows positive signal of investors’ confidence to buy more shares on the exchange and at the right price.
According to Kamphoni, these trends project a growing confidence in the economy and the prospect of listed companies doing well in the future.
“This shows that the stock market responded well to movements in the economy; inflation hitting single digit, and reduction of the spread between interest [which] banks charge on deposits as compared to charges on loans, among others, which led to more investors coming in to buy more shares,” Kamphoni said.
President Mutharika has placed priority on fixing the economy for Malawi to register sustainable development in other socio-economic sectors.
Mutharika took over in May 2014 while inflation was over 30 percent and the economy battered by Cashgate which plundered treasury.
These led to the loss of confidence in the economy by the donors and domestic and foreign investors.
The economy suffered further woes in the following two successive years as Malawi was hit by devastating floods in 2015 and then severe drought in 2016.
But Mutharika’s sound economic management policies have seen the economy rising from out of the hole it was driven into and be on the path of recovery.
As a result, among other improving indicators, the inflation has been steadily climbing down on a monthly basis from 20 percent in December 2016 to 7.7 percent in December 2017.
Last month, the Reserve Bank of Malawi announced a reduction in policy rate from 18 percent to 16 percent, signaling potential cheaper loans for businesses.
The value of the local currency has been stable against major trading currencies for more than two years now and Malawi’s forex reserves have risen to 3.7 months of import cover, above the international requirement of 3 months.