Investors upbeat on national polls

post was last updated: May 21, 2019

By Taonga Sabola:

As Malawians go to the polls to elect a president, lawmakers and councillors, the Malawi Stock Exchange (MSE) has said investors remain upbeat about the economy.

Elsewhere in developed countries, the stock market usually takes a swing depending on the policies of who investors believe could carry the day.

Where investors feel that the winner of the presidential race could bring in favourable policies, the market reacts by seeing too many people clinging to their shares, resulting in little stocks available thereby pushing up prices.

Similarly, where investors feel the next president could bring harmful policies, investors offload their stocks, resulting in price slumps.

Here in Malawi, realistic competition is among incumbent President Peter Mutharika of Democratic Progressive Party, Lazarus Chakwera of Malawi Congress Party and Vice President Saulos Chilima of the UTM.

MSE Chief Executive Officer, John Kamanga, said Monday the market had exhibited positive signs ahead of the elections.

“We can say the investors are optimistic,” Kamanga said, adding that since May 1, the market has recorded positive tidings in a number of counters.

The market has in recent months benefitted from falling interest rates, which have made the stock market more attractive.

Cedar Capital Chief Executive Officer, Armstrong Kamphoni, said the market had not been affected by election fever that has gripped the country.

He said the price movements on the market in recent weeks had been due to company performance as well as market forces of demand and supply rather than the election factor.

Alliance Stockbrokers Limited Operations Manager, Thoko Saulosi, said, in Malawi, history has shown that there is no direct impact of politics on the stock market.

“In other words, Malawi’s stock market is barely affected by elections. Nevertheless, elections have an indirect impact on the stock market. The channels to which the elections affect the stock market are through interest rates, inflation, et cetera, which, depending on the direction of the interest rates, will either positively or negatively affect the stock market.

“Furthermore, if election results affect the listed companies’ performance, it will impact the stock market but this is a post-election result in the medium term,” Saulosi said.

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