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| Business |
| Stock market shows recovery |
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by
Ephraim Munthali, 10 November 2003
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17:31:07
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In what could be seen as a political business cycle, the Malawi All Share Index (Masi) has continued to rise as the count down to elections intensifies, raising hopes that votes could prompt the incumbent government facilitate a boom.
The Masi moved to 442.14 points last Friday from 442.05 the previous Friday due to an increase in the share price of Stanbic and Nico from K6.50 to K6.60 per share and from K0.90 to K1.00 a share respectively.
The price gain propped up the Domestic Share Index (DSI) by 3.08 percentage points from 222.45 to 225.53 points.
Apart from Stanbic and Nico, the market also recorded trading activities in National Bank, Sugar Corporation of Malawi (Sucoma) and Old mutual Limited (OML) which represent the Foreign Share Index (FSI).
During the week, a total of 53,120 shares were transacted at a total consideration of K399,212, according to the Malawi Stock Exchange (MSE).
The impressive performance on the bourse will be bouyed by approvals from the International Monetory Fund (IMF) and World Bank which have led to the release of up to K20 billion in budgetary support and pledges of further disbursements from mid 2004.
Various donors had for the past three years refused to release budgetary support on concerns of government overexpenditure on non priority areas, failure to conclude high level corruption cases and delays in completing the privatisation programme.
The scenario sent the economy into deep recession since 2000 when growth fell to two percent from 3.2 percent in 1999.
In 2001, the economy sank by -4.1 percent and shrunk by a further -1.8 percent last year and reflected in the performance of the local bourse which was said to be worst in Africa last year.
But with donor inflows on the way, confidence is building on the market as 90 percent of the money will be used to offset the K50 billion domestic debt and hopefully bring down interest rates now at 46 percent to affordable levels and allow the private sector fully apply the factors of production.
These factors are expected to bring recovery with analysts already forecasting a 3.4 percentage growth in Real Gross Domestic Product (GDP) for this year and 4.3 percent next year.
National Bank of Malawi (NBM) predicts that Gross Domestic Investment as a percentage of GDP will increase by 9.9 percent this year and10.6 percent in 2004.
Interest rates are estimated to fall to 43 percent in the short term this year and drop further to 35 percent in 2004. |
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