Malawi Stock Exchange (MSE) capitalisation has grown to K6.4 trillion, an equivalent of about 35 percent of the country’s gross domestic product (GDP), a rate market analysts have rated as impressive.

This comes as valuation of listed companies continues growing exponentially, with two of the 16 counters, Airtel Malawi and FMB Capital Holdings, having their market capitalisation hitting K1 trillion

In an interview at the weekend, MSE Chief Executive Officer John Kamanga said the growth signifies an important role of the stock market on the economy.

“That is why we have always said that the financial market in Malawi is capable of providing the needed capital, especially to State-owned enterprises instead of borrowing from outside and putting pressure on limited foreign exchange,” Kamanga said.

 
Market analyst Bond Mtembezeka said the market capitalisation-to-GDP ratio, also known as the buffet indicator, measures the value of all stocks on a market relative to the country’s GDP.

He said the increase in the ratio means the market is growing strongly relative to the GDP.

“The outlook is still good as more people are having keen interest in the market and the companies are doing well as evidenced by half year trading statements,” Mtembezeka said.

Financial Market Dealers Association President Leslie Fatch said the development means there is value being created through the stock market as investors are reaping their fruits.

Fatch added that market performance reflects confidence on the stock market and points at how companies can benefit from listing.

 
“More importantly, it also speaks of the benefits that the investors on the stock market are reaping through share price gains emanating from better individual company performances,” Fatch said.

Malawi Stock Exchange has 16 counters with the banking sector commanding the majority as it has FMB Capital Holdings, FDH Bank, National Bank, NBS Bank and Standard Bank.