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| Investors still shunning MSE |
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by
Ephraim Munthali, 24 March 2003
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Investor confidence on the local stock market continues to wane amidst uncertainties in the economy with last week’s trading realising a meagre K800 from 500 shares.
The Malawi Stock Exchange (MSE)’s market analysis report for last week indicates that the week only saw a trade activity in one counter—Packaging Industries (Malawi) Limited (PIM) whose share price decreased from K1.70 to K1.60.
The decrease in the price of PIM shares led to a slight decrease in the domestic Share Index from 220.58 points to 220.41 points, resulting in a slight slump in the Malawi All Share Index (Masi)—a barometer that measures trade activities on the local bourse—by 0.01 point from 339.99 points to 339.98 points.
Analysts say a global economic recession has resulted in most markets worldwide to take a nose-dive and that Malawi has not been spared since it is part of the global village.
The country’s industrial, manufacturing and trade growth has over the past year been hit by an unfriendly economic climate characterised by high inflation and interest rates, a shrinking buying power resulting from the food crisis and a general lack of competitiveness and inefficiencies, factors that have led to company closures and down-sizing of some big firms.
In the case of Malawi, they say, the situation has been worsened by its small and illiquid market, large overhangs of residual parastatal share holdings in listed companies and the prevailing high real returns available from competing money market investments like Treasury Bills (TBs).
The three factors combined resulted in the local bourse being ranked as the second worst performer in Africa in terms of US dollar returns and the worst on the continent in terms of price per earnings ratio.
Last year, daily average turnover from shares on the local bourse decreased by 82.19 while the average volume of shares dropped by 82.72 percent.
In an apparent sign of distrust, most investors are more willing to sell their shares than buying and that those willing to buy always bargain for low prices, according to stock brokers. Brokers say this is contributing to low returns on the bourse.
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