Lack of liquidity affects Malawi Stock Exchange

The inability for companies to float more shares on the Malawi Stock Exchange (MSE) has presented trading challenges which in the end prevents more investors to come in on the market.

This has been witnessed in the Blantyre Hotels Limited (BHL) counter which has for over 12 months not recorded.

But last week with only 60 tambala addition to its share price, investors in the counter were willing to sell the share after holding it for long to earn them some returns.

The counter has 128,449, 516 shares in issue and some three years ago it was contemplating on releasing some more shares on the market to spur trading, an issue it is still discussing with MSE.

Malawi Stock Exchange

MSE Operations Chief John Kamanga told the press earlier that most of the companies, on average, not more than 15 percent on the market a development that gives the public limited chances to buy as others would want to hold the shares for the long-term.

FDH Stockbrokers said there was no trading on Monday this week with demand for Press Corporation Limited, Old Mutual, Standard Bank and TNM Limited despite cautionary statement from the mobile phone company.

The brokers Managing Director Davis Manyenje is quoted by Reuters as saying there are many factors that have affected trading at the market.

“Foreign currency and fuel are scarce, and most foreign investors have gone quiet,” he said.

The report classifies MSE as poor but fast-growing within sub-Saharan Africa and that the region has potential to offers huge opportunities to international equity investors – if it weren’t for the liquidity scourge.

Because of the low liquidity levels, Malawi’s average daily turnover is just US$210,000 compared with South Africa’s JSE at US$1.7 billion a day.

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