These days, more and more investors are seeing Malawi’s Stock Exchange (MSE) as a great place to invest. 

You might be wondering why invest in MSE now? Well, the answer is right in front of us.

Malawi, also known as the “Warm Heart of Africa”, is a fast developing country. The economy here is growing, driven by agriculture, mining, financial and many other sectors. The government of Malawi has always been working to build better structures and investment opportunities. They aim to create a strong set of rules to attract both local and international investors. The Malawi Stock Exchange (MSE) is a part of this progress. As Malawi continues to improve its financial areas and structures, Malawi’s stock market has seen visible progress. The MSE market is offering investors a variety of business opportunities with high returns. Even though the country has some economic problems like currency shifts, the MSE has shown strong resilience, with growing market capitalization and trading activity. This blog explains five key reasons to invest in Malawi’s MSE. These reasons include strong economic growth, great value with high returns, a growing financial sector with market improvements, diversification with low risk, and a business-friendly environment.

This blog will discuss the reasons to invest in Malawi’s Stock Exchange (MSE)

Strong Economic Growth Potential

Great Valuation & High Returns 

Expanding Financial Sector & Market Reforms 

Diversification & Low Market Correlation 

Supportive Regulatory & Business Environment

Malawi’s Stock Exchange (MSE) is a great place to invest. It offers good growth, high returns, and positive market changes. Here are five key reasons to invest in MSE-

Although Malawi had shown promising results and done a lot of valuable work in 2023, investors were worried at the start of 2024. This was mainly because the Kwacha lost 44% of its value in November 2023. Experts expected that this would have a big effect on the economy. Still, the stock market stood firm and grew well in 2024. The entire market value increased greatly by 47%, reaching K8.81 trillion ($5.08 billion) in 2024. The Malawi All Share Index (MASI) also grew by 47% in 2024. The MASI checks if the market is working well, so it is crucial.

Another activity that has significantly increased in percentage is trading activity in Malawi. This was more active in November. Share trading increased by 410%, which is great in comparison to the percentage of October. The entire value of trades in November was K35.8 billion ($20.64 million). This was a massive 84.72% growth from October.

The Ministry of Mining has said that all the mining companies have agreed to list on the MSE once their Mining Development Agreements (MDAs) are done. This move aims to boost locals taking part in the mining sector. The Chief Operating Officer, Kalline Kondo, of the MSE made a decision, saying it will:

Allow Malawians to invest and become shareholders in mining companies.

Help mining companies get funds for their operations and the expansion of the area.

Provide more investment opportunities in Malawi’s stock market, which currently has only 16 authenticated listed companies.

 

The Mzinga incubation program is one of the important and smart actions used by the MSE. The program aims to enhance access to patients and budget-friendly capital for Small and Medium Enterprises (SMEs) through empowerment. This will enhance SMEs’ readiness to list on the MSE, being under the Enterprise Development and Growth Exchange (EDGEx) platform.

The World Bank is funding the Mzinga Incubation Program through the Financial Inclusion and Entrepreneurship Scaling project (FInES).

In 2023, 13 out of 16 companies listed on the MSE declared dividends, with many showing growth:

Press Corporation: Declared a final dividend of K4.45 billion (K37 per share) for the year ending on December 31, 2023, a 27% increase from 2022.

National Investment Trust Limited (NITL): Declared a final dividend of K675 million (K5 per share) for 2023, more than  K317 million (K2.35 per share) in the year 2022.

NBS Bank (New Building Society Bank): Experienced a decline, with dividends at K1.88 billion (K0.64 per share) more compared to K2.63 billion (K0.90 per share) in 2022.

In the first half of 2024, four MSE-listed banks: NBS Bank, FDH Bank, National Bank of Malawi (NBM), and Standard Bank had collectively posted a profit after tax of K145.05 billion, a 61.5% increase from K89.66 billion in the same period the previous year.

Nine companies on the MSE expect great profit increases for the financial year ending December 31, 2024.

• The Malawi Stock Exchange (MSE) saw great growth in 2024, with market capitalization rising by 56%. MSE CEO John Kamnga talked about and complemented the market’s strength, noting that nine out of the 16 listed companies had bigger returns, higher than the 27% inflation rate.
• A 55% return on investment (ROI) was experienced by investors in 2024. These results showed a strong performance of the exchange. Although the ROI was lower than the highest recorded ROI (78.85%) in 2023, experts still consider the performance very good, given the challenging financial positions.
• The market capitalization of the MSE reached 40.7% of Malawi’s GDP (Gross Domestic Product) in August 2024. This was higher than the GDP recorded in July 2024. The amount was 37.2% in the month of July 2024. This significant growth in GDP indicates that the Malawi stock market is becoming a crucial part of Malawi’s economy. These results attract more local and international investors, showing valuable opportunities for investment.

• The Malawi Capital Markets Development Plan (MCMDP) aims to make Malawi’s capital markets stronger and more active, supporting the financial and economic growth and maintaining financial stability.

By 2025, Malawi’s capital markets aim to gather and direct savings into the country’s economy, supporting its growth. The markets will provide long-term funding to a variety of investors and businesses, each with different levels of risk tolerance and investment periods. Malawi plans to grow and develop a well-working, deep and liquid market where financial materials are fairly priced and traded at low costs. Market brokers will compete fairly, giving budget-friendly, affordable and great financial services. A strong legal and systematic rule system will allow people to innovate while ensuring trust and morals in the market. 

Moreover, Malawi will invest in world-class financial infrastructures to enable smooth transactions, manage possible risks and share precise and timely information. The country will also focus on developing and building local talent in financial market services. The long-term goal of the MCMDP is to help Malawi’s capital markets qualify as a frontier market within 10 years. By the year 2025, it is expected that:

1. The ratio of equity market capitalization to GDP will reach 55%
2. Through capital markets, government financing will increase to 60%
3. Corporate bond market capitalization will grow from its current low levels to 1.25% of GDP

The MCMDP is built on three key pillars:

1. Improving and increasing access to capital markets to build economic growth
2. Enhancing market performance, infrastructure and morals.
3. Strengthening legal, systematic rules and policy support.

• MoU by the Malawi Stock Exchange (MSE) and the Public Private Partnership Commission (PPPC): A Memorandum of Understanding (MoU) was signed by the Malawi Stock Exchange (MSE) and the Public Private Partnership Commission (PPPC) on the 20th of November, 2024. This was signed at the offices of MSE. This marked a powerful and smart partnership for the growth of the PPPs (Public Private Partnerships) in Malawi. This partnership aims to strengthen the PPP foundation, improve infrastructure, enhance service delivery, and attract more investments.

The PPPC, authorized under the PPP Act of 2022, eases PPPs and privatization, while the MSE, governed by the Financial Services Act of 2010 and the Securities Act of 2010, uses a transparent and regulated securities market. Together, both sides will work on enhancing the financial solutions for PPP projects, improving project results and achieving economic stability.

The MoU makes this formal, focusing on improving PPP financing manners, increasing project practicality and encouraging the public to take part, including easy-to-use stock market-registered entities, to achieve shared objectives.

• Financial Sector Policy Section: A crucial role in strengthening the MSE is played by the Financial Sector Policy Section (FSPS). This is achieved by making a supportive environment for the growth of the market and investment. Since FSPS focuses on policies and rules, innovation, and capacity building, its efforts are directly impacting MSE’s performance and durability. By creating strong laws and rules that force stability, FSPS helps build investor confidence. This makes MSE a reliable platform for long-term financing.

Moreover, FSPS works to increase financial access. This is by giving opportunities to be listed on the stock exchange to more companies. This attracts a wide range of investors. Through its support for creativity and financial technology, FSPS helps market operations become more modern, making trading more effective and accessible to everyone. The section also keeps close watch on the overall stability of the financial sector, ensuring the MSE remains strong on its ground even when many hard challenges enter the economy.

MSE is allowed by FSPS to provide businesses with more chances for funding. This is through improving capital and debt markets. The contribution to Malawi’s broader economic growth through this is huge. FSPS builds the foundation for a strong financial sector, with MSE playing a critical role in handling investment and supporting national development.

• Malawi Financial Sector Technical Assistance Project (FSTAP): Another sector that has boosted the country’s financial system, benefiting mostly the MSE, is the Malawi Financial Sector Technical Assistance Project (FSTAP). Key achievements include the introduction of the Automated Trading System in 2019, which is connected by MSE to the Central Securities Depository, enhancing market effectiveness. Another way MSE engaged people and other businesses was through FSTAP. This is because FSTAP increased the financial cover through digital banking and mobile money. This allowed people and businesses to stay engaged. By improving financial rules, literacy and investor protection, FSTAP became the main reason for greater, better investor confidence. All of these hardworking efforts made the MSE even stronger. MSE improves infrastructures as well, making them more usable, durable, and better. All these will support the economic growth of Malawi and increase opportunities for investments.

• Different companies from different sectors, such as finance, telecommunications, manufacturing and agriculture, get hosted by the Malawi Stock Exchange (MSE). This variety of companies allows investors the opportunity to spread their investment across different industries, helping to lower risk. Investors can create a wide range of other portfolios that are more resilient to market shifts. All of these companies are listed on MSE’s official website. This makes it easier for investors to see their options and build a sound investment plan. This variety of sectors works to promote a healthy, easy and good investment environment. This also attracts both local and international investors.
• Low correlation with greatly built and developed markets has always shown to be low with the African border markets, also with the Malawi Stock Exchange (MSE). This is backed by a study that has shown that small and still-developing markets have a high correlation with already big and developed markets. But African border markets like MSE show a much lower correlation. This low correlation marks that MSE listed companies in a worldwide investment portfolio can improve variety, lowering the risk of the overall portfolio. Investors can reduce submission and unpredictability in developed markets and get benefits from the growth opportunity in African border markets.
• The MSE operates within Malawi’s innovative economic environment, which is different from global markets. This uniqueness means that global economic events may have lower impacts on the MSE, offering investors an advantage against global market unpredictability. Research has been ongoing on MSE’s market dynamics for over 6 years, and it shows that despite some mixed performances in some indicators, the MSE has shown overall positive returns, proving its resilience during the shift of global market conditions.

• The Reserve Bank of Malawi regulates the MSE, which is the nation’s central bank. This ensures that the exchange operates nicely and encourages investor confidence. The RBM’s supervision includes overseeing trading activities, enforcing compliance with financial rules and applying policies that promote market stability. This systematic rule foundation is important for having a secure and reliable investment environment, attracting both local and international investors to take part in Malawi’s capital markets.
• The companies that are listed on the MSE are required to follow the financial disclosure practices. They must publish yearly financial reports within 6 months after the end of the financial year and interim (half-yearly) reports within 3 months after the interim period. If a company’s financial results are expected to change by at least 20% compared to the previous period, they must write and release a trading statement. Those rules help investors get clear and accurate financial information, making it easier for them to make good decisions and keeping the market honest and truthful.
• Malawi has established a broad legal framework and a set of rules that form the foundation governing its capital markets. This foundation marks the responsibilities and obligations of market participants, including issuers, investors and brokers. It encompasses regulations on market rules, listing requirements and corporate governing standards. The foundation’s goal is to have a fair and better market environment, reduce risk, and build better investor protection. This is possible by providing clear guidelines and ensuring compliance. This clarity and pillars are essential for the betterment of the MSE and a bigger financial sector.

The Malawi Stock Exchange (MSE) offers many great opportunities for investors who want growth in the border market. With a durable economy, strong market performance and ongoing changes in the financial sector’s rules, the MSE is making itself an important platform for capital mobilization. The growth of listed companies, increased investor participation, and government-backed actions further increase its value. While different problems and challenges, such as market liquidity, still exist, the long-term benefits, including high returns, portfolio variety, and a stable set of rules, make Malawi’s MSE a good opportunity for investing. Investors who want to explore Malawi’s capital market will find great value and opportunities for stable financial growth. Now that it’s time for a development in the overall stock market, it’s certainly reasonable to invest in the Malawi Stock Exchange and contribute to the country’s economy with pride!