Despite a drop in yield rates for treasury bills (TB) from 40 percent to around 33 percent investors are still flocking to the money market as witnessed on TB auction of May 07, 2013 which was oversubscribed by 6 times.
The auction resulted in government raising K0.6 billion against a market supply of K3.8 billion translating to a 6 times oversubscription rate and an 83 percent rejection rate.
According to investing firm, NBM Capital Limited, the oversubscription was on the back of high liquidity levels in the financial system, closing with a surplus of K5.5 billion above the required reserve levels of K34.8 billion.
“Yields further went down by an average of 252 basis points for the all Type T-Bill to close at 33.91 percent on a weekly basis. The monetary policy committee decided to hold the bank rate at 25 percent. This was expected as the bank rate had been below both the inflation rate and TB yields for most part of the year,” NBM Capital said.
The company noted however that change in the bank rate should be expected in the second half on 2013.
On the capital market, 7 counters registered trading at the Malawi Stock Exchange (MSE) with a total volume of 7,553,479 shares sold.
According to a weekly report from the MSE the sold shares were amounted at K41 million, about, which is a 98 percent decline in both turnovers from the previous week’s volume of 775 million shares which realised a total consideration of K1.4 billion.
NBM Capital said all the highly demanded counters of Illovo, National Bank of Malawi and Standard Bank registered trades.
“Old Mutual jumped with K6 to close the week at K886 per share, effectively moving up the Foreign Share Index (FSI) by 1.84 percent. NITL closed at K17 per share. The movement on NITL and Old Mutual resulted in a positive shift of the Malawi All Share Index to close at 6375.75 points from 6374.87 points,” NBM Capital said.