Market Volatility Sparks Concerns for Malawi’s Economic Growth

Key Business Points

• Stock market analysts warn of an imminent pullback in prices due to recent share price surges on the Malawi Stock Exchange (MSE), with some stocks considered "overbought" and potentially threatening investor losses.
• The average price-to-earnings (P/E) ratio on MSE has risen significantly, from K13.75 in 2022 to K42.57 in 2025, indicating a potential overvaluation of stocks and a risk of price volatility.
• Increasing the number of listed companies on MSE is seen as a key solution to addressing the market’s structural limitations and reducing the risk of price fluctuations, making it easier for investors to make informed decisions.

The Malawi Stock Exchange (MSE) has come under scrutiny from stock market analysts, who are warning of a potential pullback in prices due to recent share price surges. The share prices of five banks, including NBS Bank plc, FDH Bank plc, and Standard Bank plc, have jumped significantly between January and September this year, raising their price-to-earnings (P/E) ratios and the market’s average P/E ratio. According to Cedar Capital Limited, a stockbroking firm, the market’s weighted average P/E ratio has risen from K13.75 in 2022 to K42.57 in 2025, which is significantly out of its historical range. This has led analysts to suggest that the market is "overbought", meaning that stock prices have risen sharply and quickly, potentially beyond their intrinsic value.

Stockbrokers and market analysts have expressed concerns that the situation may not be severe, considering the small size and nature of MSE, which rarely responds to market developments. However, they also warn that this exposes investors to the risk of price volatility that is not necessarily tied to company fundamentals, making it harder to make well-informed investment decisions. Kuwatha kukonza bizinesi, or growing businesses, is crucial for the development of the MSE, and increasing the number of listed companies is seen as a key solution to addressing the market’s structural limitations.

Financial expert and stock market investor Brian Kampanje has warned that the possibility of a bubble burst could happen if there are speculators driving the market share price of some counters. This could lead to massive losses for institutional investors, such as pension funds, and negatively affect the quality of shares as collateral. Kuziba za mwamba, or market fluctuations, can have significant consequences for investors, and it is essential to investigate the movement and deal with the problem if proven. The MSE chief operations officer, Kelline Kondowe, has declined to comment on the developments, but has hailed the market’s recent strong performances as a sign of its strong potential. Tikukonza pamoza, or growing together, is essential for the development of the MSE, and it is crucial for stakeholders to work together to address the market’s challenges and ensure its continued growth.

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