Malawi Stock Exchange rejects collapse claims; describes market decline as temporary and normal correction

MSE Chief Executive, John Robson Kamanga

* During the year 2025, the market experienced exceptional growth, with the market reportedly registering a Return on Equity (ROE) of 247.5% — both in Kwacha and US Dollar terms — and got recognised as the best performing stock market in Africa

By Duncan Mlanjira

The Malawi Stock Exchange (MSE) has dismissed recent media reports suggesting that the country’s capital market is collapsing and could cease operations within the next year — describing such claims as inaccurate, misleading and inconsistent with the fundamentals of how stock markets operate globally.

Reacting to media reports, which were exacerbated by fierce debate on social media platforms, alleging that approximately K5 trillion in market value had been lost between December 2025 and May 2026, MSE Chief Executive, John Robson Kamanga said “the recent decline in market capitalisation should be understood within the broader context of market cycles, valuation adjustments and institutional portfolio rebalancing rather than interpreted as a collapse of the Exchange itself”.

Some commentary suggested that the MSE could become “functionally dead” if the current trend continues, but his response, Kamanga maintained that “stock markets worldwide naturally experience periods of rapid appreciation followed by price corrections, particularly after unusually strong market rallies”.

The MSE chief added that during the year 2025 “the market experienced exceptional growth, with the market reportedly registering a Return on Equity (ROE) of 247.5% — both in Kwacha and US Dollar terms — and got recognised as the best performing stock market in Africa”.

“This sharp increase significantly elevated valuations across several listed counters, resulting in market Price-to-Earnings (P/E) ratios and Price-to-Book ratios rising beyond regional comparables.”

Economic analysts note that when valuations rise rapidly within a short period, markets often undergo corrections as investors reassess pricing relative to company fundamentals and regional benchmarks.

The MSE CEO thus emphasised that the current decline “reflects a valuation adjustment process rather than the failure of listed companies or the collapse of the market infrastructure”.

“Stock markets are cyclical in nature and fluctuations are a normal part of market dynamics globally,” he said, while further clarifying that “the reduction in market capitalisation does not imply that cash physically disappeared from the economy, but rather reflects changes in investor valuation of listed securities based on prevailing market conditions”.

He also highlighted structural and regulatory factors that have contributed to temporary selling pressure on the market, saying: “In late 2025, the Registrar of Financial Institutions (RFI) reportedly introduced investment exposure limits on stock market investments by pension funds and life insurance companies.

“This process increased the supply of shares on the market over a relatively short period,” he said.

Market analysts indicate that “while institutional investors possess significant holdings, the domestic retail investor base remains comparatively small, limiting the market’s short-term absorption capacity”. “The resulting imbalance between supply and demand contributed to downward pressure on share prices across several counters.”

Despite these developments, the MSE “maintains that the market continues to function normally, with ongoing trading activity, active listed companies, regulatory oversight and continued investor participation”.

Kamanga emphasised that listed institutions such as banks, telecommunications firms and diversified financial groups “remain operational resilient and continue contributing significantly to Malawi’s economy through employment creation, wealth distribution, tax contributions, financial intermediation and capital formation”.

He further reiterated the MSE’s long-term strategic importance in mobilising domestic savings and providing businesses with access to long-term capital for expansion and investment.

“Since its establishment in 1994, the Malawi Stock Exchange has played an important role in developing Malawi’s financial sector by enhancing corporate governance, improving transparency standards and broadening investment participation among citizens and institutions.”

Kamanga also acknowledged the continued support it receives from Government, through the Ministry of Finance and the Registrar of Financial Institutions, “in strengthening the capital market environment”.

He made particular reference to recent stakeholder engagements on Capital Gains Tax reforms, which resulted in downward revisions aimed at improving market attractiveness and supporting long-term investment growth.

The CEO thus cautioned that “while current macro-economic challenges — including foreign exchange shortages, inflationary pressures and reduced investor liquidity — continue to affect investor sentiment, these factors are part of broader economic conditions affecting multiple sectors of the economy and not solely the stock market”.

The MSE chief further urged the public and media institutions “to approach capital market reporting responsibly and to distinguish between normal market adjustments and actual systemic market failure”.

“With continued collaboration and engagement with all stakeholders, we remain confident in the long-term development and sustainability of Malawi’s capital market,” said the CEO, who is the immediate past President of Capital Markets Association of Malawi.