By Chisomo Phiri
It has emerged that despite recent amendments to listing requirements, the Malawi Stock Exchange (MSE) is still struggling to attract new listings, largely due to the country’s prevailing economic challenges.
Recently,MSE announced the reduction of the capital requirement for listing from K500 million to K400 million and that the companies to be listed need to demonstrate profitability for two consecutive years.
But in an interview, MSE Chief Operating Officer,Kelline Kanyangala,said companies are hesitant to list due to concerns that high stock prices will deter investors.
Meanwhile, economist Abel Mwenibanda suggests that improving financial literacy through civic education could help boost the market.
He argues that many Malawians lack a clear understanding of how the stock market operates, which hinders its growth.
MSE has been in existence since 1994 but started equity trading in November 1996 when it first listed National Insurance Company Limited (NICO).
Prior to the listing of the first company, the major activities that were being undertaken were the provision of a facility for secondary market trading in Government of Malawi securities namely; Treasury Notes and Local Registered Stock.
The company is licensed under the Financial Services Act 2010 and operates under the Securities Act 2010 and the Companies Act 2013.
The important functions of the MSE are:
-Providing a link between financial raisers and financial suppliers (investors)
Providing market place for buyers and sellers of listed securities.
-Supervising trading activities
Supervising the conduct of member firms.
-Providing information services such as market trading information.
-Providing announcements made by listed companies.
The government entity has three platforms namely, the Main Board, Alternative Capital Market and Debt Market.
The Main Board is meant to cater for larger and well established companies; while the Alternative Capital Market was established to provide opportunity for the Small and Medium-sized Enterprises (SMEs) who would like to raise capital at a lower cost by accessing public funds.
The Debt Market caters for issuers that would want to raise debt capital as opposed to share capital.
