How to Buy Shares on Malawi Stock Market

How to Buy Shares on Malawi Stock Market

A lot of business-minded people will advise you to invest your money.

You can invest your money in different ways, be it farming or starting your own company.

There is also the option of investing in already established companies by buying shares.

But buying shares seems like rocket science especially if you don’t even know what the Malawi Stock Exchange is.

In this article, we give you a step-by-step process of how you can buy shares and important insights about the Malawi stock market.

Insights by
Kelline Kondowe, Chief Operating Officer, Malawi Stock Exchange
Tafadzwa Mwawa, Equity Dealer, Continental Capital Limited

Malawi Stock Exchange

The Malawi Stock Exchange (MSE) was established in 1994 to provide a link between financial raisers and financial suppliers as well as provide a marketplace for traders of listed securities amongst many other functions.

The MSE is where all the shares of publicly listed companies are traded.

MSE has a website that has market-related information such as daily market reports, announcements from listed companies, current share prices of listed companies, and numerous other important things.

The Malawi stock market has a limited number of securities with only 16 publicly listed companies.

The market also has few traders compared to the population of Malawi.

Although it is a relatively small market, MSE has a world-class trading engine that was introduced in 2018 hence trading is not done manually.

Mainboard Listing Requirements

  • The company must be duly incorporated.
  • The company must be a public company in accordance with the Companies Act, 2013.
  • The company’s securities must be fully paid up and freely transferable.
  • The company must have a minimum subscribed capital of at least MK500 million.
  • At least 25% of the issued capital for which a listing is being sought must be offered to the public.
  • The company must have not less than 30,000,000 equity shares in issue.
  • The number of public shareholders of listed securities shall at least be 300 for equity shares; 25 for preference shares and 10 for debentures.
  • The company must have a satisfactory profit history for the preceding three years.
  • The company’s securities must be fully underwritten.
  • The Memorandum and Articles of Association of the company must comply with the requirements of the Malawi Stock Exchange Listings Requirements and the Companies Act.

Comparison of the Malawi Stock Market with Stock Markets in Neighbouring Countries

The MSE has a total market capitalization of 3.2 billion US dollars which is lower than that of the Lusaka Securities Exchange (LUSE) which has a market capitalization of 4.1 billion US dollars.

Companies listed on LUSE earnings grew by 103% over the last three years.

LUSE has more companies than MSE, as it consists of 22 listed companies.

Tanzania’s Dar es Salaam Stock Exchange (DSE) has a market capitalization of 6.2 billion US dollars with 27 listed companies with earnings of listed companies growing by 29% per year over the last three years.

The biggest stock market in Africa is the Johannesburg Stock Exchange with a market capitalization of 314 billion US dollars with 400 listed companies.

The JSE’s listed companies’ earnings have grown 81% per year over the last three years.

How to Buy Shares

First, you have to choose a stockbroker with whom you will open a share trading account.

There are currently three stockbrokers in Malawi.

  • Continental Capital Limited
  • Stockbrokers Malawi Limited
  • Cedar Capital Limited

The stockbroker will give you an account opening form that you will have to fill out.

Note that opening a share trading account is free of charge.

The following documents are also required;

  • Copy of ID (e.g. National ID, Passport)
  • Payslip or bank statement
  • Utility Bill
  • Copy of business registration certificate (if applicable)

You will also be asked to provide a will.

If you don’t have a will, you will be required to fill out the beneficiary form.

Now, you can deposit money into the share trading account.

After you deposit money into the account, you can instruct the broker to buy or sell shares on your behalf on the Malawi Stock Exchange.

The minimum amount of shares you can buy is 1.

There is a commission charged on the shares you are trading.

Commission Fee

Value of Shares Commission Fee
MK0 – MK50,000 2%
MK50,000 – MK100,000 1.5%
Above MK100,000 1%

You can monitor your investment by following the operations of the company you have shares in as well as observing the economy and other things that can influence the stock market.

Stockbrokers will also provide you with guidance on trading but this is solely on your goals.

Stockbrokers also analyse the stock market and provide their clients with weekly, annual, and biannual reports.

Benefits of Buying Shares

  • When you buy shares you become a part owner of that company and you receive dividends at the end of each financial year. You will also be involved in making decisions for the company.
  • When a company is doing well the share price increases, meaning that you can later sell your shares at a profit.
  • You can use your shares as collateral to obtain a loan from financial institutions.

Public Listed Companies

Company Name Listing Price 2020 Price 2021 Price 2022 Price Current Price Date Listed
Airtel Malawi 12.69 27.98 40.00 56.64 100.20 24 Feb, 2020
Blantyre Hotels 0.84 12.94 11.01 10.97 10.06 25 Mar, 1997
FDH Bank 10.00 14.45 15.81 17.37 76.00 3 Aug, 202
FMB Capital Holdings 45.01 22.04 80.00 110.86 341.03 18 Sep, 2017
ICON Properties 8.75 12.27 12.89 11.95 18.97 21 Jan, 2019
ILLOVO Sugar Malawi 2.25 21.00 20.70 20.64 20.56 10 Nov, 1997
MPICO 2.25 21.00 20.70 20.64 20.56 12 Nov, 2007
National Bank of Malawi 4.00 650.00 810.12 1,542.05 2,100.00 21 Aug, 2000
National Investments Trust 2.65 94.95 94.98 124.99 401.01 21 Mar, 2005
NBS Bank 2.60 20.00 22.90 34.00 131.98 25 June, 2007
NICO Holdings 2.00 52.00 55.00 60.00 163.01 11 Nov, 1996
Old Mutual Limited 1580.22 2,199.98 2099.99 985.00 1,050.00 26 Jun, 2018
Press Corporation 14.89 1,336.34 1,900.00 2,181.37 2,508.00 09 Sep, 2009
Standard Bank 3.25 910.00 1,400.00 2,000.16 2,500.01 29 Jun, 1998
Sunbird Hotel 2.60 105.00 90.01 92.06 190.10 21 Aug, 2022
Telekom Networks Malawi 2.00 19.23 22.92 14.00 29.98 03 Nov, 2008
As of close-of-market on 22 August 2023. All prices in Malawi Kwacha. Price for the years 2020 to 2022 is as of close of market on 31 December in each respective year.

From the table, every listed company’s share price increased tremendously from the day of listing to date.

The top gainers for the year 2022 were National Bank of Malawi, Illovo Sugar Malawi, NBS Bank, Standard Bank, and Airtel Malawi in that particular order.

Out of the 16 publicly listed companies, 11 were gainers.

Currently, traders are interested in investing in banks and telecommunication companies as they are making gains as evidenced by the 2022 annual report.

When a company is making gains, it also means the shareholders are making gains.

For instance, during FDH Bank’s initial public offering, its share price was K10 but now as of 18 May 2023, its share price is K64.95.

This means that if you bought shares then and decide to sell now you will make a profit of K54.95.

However, you have to keep in mind the value of the Kwacha changes and has fluctuated over the years.

For instance, in 2005 when National Investments Trusts was being listed, 1 US dollar was equal to K108.90 while now it is equal to K1081.19.

1.4 billion shares (51.7 billion Kwacha) traded in 2022

Before you make a decision to buy shares of a certain company, you have to understand what the company you are investing in does, you also have to understand earnings per share and numerous other technicalities that your stockbroker will assist you with.

Most importantly, you have to be clear about your investment goals; are you investing for short-term yield or long-term yield?

For instance, if you are investing for the short term, you can consider companies that have high dividend yield, and if it’s for the long term you can consider buying shares in companies that have the potential to grow but have low share prices.

You need to also understand how the economy works and how it affects the operations of companies so that you make informed decisions when trading.

Interestingly, you can also open an account for your children so that when they are of age they will have accumulated a significant amount of shares and the share price would also be higher depending on company performance.

The Future of the Malawi Stock Market

As earlier stated, the Malawi Stock Market is relatively small.

However, MSE and stockbrokers are devising ways to enhance the stock market.

MSE continues to devise innovative ways to bring more companies onto the stock market as well as sensitising the public on equity trading so as to have more traders.

MSE has a chatbot where information about investing can easily be found.

You only have to save the number 0887249784 and send a ‘hi’ and follow the instructions that will be sent.

MSE is still enhancing this platform to ensure people have the information that they need right at their fingertips.

One of the stockbrokers, Continental Capital Limited plans to fully go digital.

The Blantyre-based company wants to introduce a digital platform, where clients can make transactions online in the comfort of their homes.

Continental Capital also wants to reach out to a lot of people so that the masses know the importance of investing in the stock market.