Reserve Bank of Malawi. Monthly Economic Review

Transcription

1 Reserve Bank of Malawi Monthly Economic Review September 2018

2 Table of Contents 1.0 INTRODUCTION Gross Official Reserves Exchange Rates Money Supply Interest Rates Inflation EXTERNAL SECTOR BANKING AND FINANCE CENTRAL GOVERNMENT BUDGETARY OPERATIONS PRODUCTION AND PRICES MONEY AND SECURITIES MARKET CAPITAL MARKETS APPENDIX... 17

3 LIST OF TABLES Table 1: Money Supply and its Sources... 3 Table 2: Central Government Budgetary Operations... 7 Table 3: Financial Market Operations Table 4: Treasury Bills Issuance and Maturity Table 5: Banking System Liquidity Table 6: Interest Rate Structure Table 7: Selected Economic Indicators Table 8: Year on Year Inflation Table 9: National Consumer Price Indices Table 10: Selected Exchange Rates Table 11: Malawi All Share Indices... 21

4 GENERAL NOTES This Economic Review is produced by the Reserve Bank of Malawi (RBM) with the aim of providing current economic information to stakeholders. The Review is published within six weeks after the end of the reviewed month. This particular issue outlines domestic financial and macroeconomic developments during the month of September Owing to the rounding up of figures, separate items may not always sum to corresponding totals. In the tables, the following symbols should be noted:.. Means not available - Means nil or less than one half the significant digit * Means projection + Means revised figure ^ Means preliminary figure All queries relating to this publication should be forwarded to the Director, Economic Policy Research Department, Reserve Bank of Malawi, P.O. Box 30063, Capital City, Lilongwe 3. Tel: ; or Fax ; or research@rbm.mw.

5 1.0 INTRODUCTION This Economic Review highlights economic developments during the month of September The developments are compared to the previous month but also to the corresponding month of the previous year. The analysis covers developments in the exchange rates, money, credit and interest rates, inflation and real sector. The report also highlights developments in government operations and the stock exchange market. 1.1 Gross Official Reserves Gross official reserves stood at US$689.2 million in September 2018 compared to US$746.1 million recorded in August This represented 3.3 months of imports. 1.2 Exchange Rates The Malawi kwacha remained stable against the United States dollar and euro but slightly depreciated against the pound in September Meanwhile, the kwacha appreciated against the rest of the currencies of its major trading partners. 1.3 Money Supply Broad money supply (M2) growth (year-on-year) accelerated to 15.5 percent in September 2018 from 11.0 percent in August 2018 and 14.2 percent in September The increase was driven by growth in Net Domestic Assets (NDA). On month-on-month basis, M2 marginally decreased to K1,140.6 billion from K1,140.7 billion in August Interest Rates The RBM maintained the Policy rate at 16.0 percent in September Consequently, commercial banks interest rate structure remained unchanged. The average base lending and the average savings rates were thus recorded at the previous month s positions of percent and 8.39 percent, respectively. 1.5 Inflation Reflecting rising prices of food and non-food items, inflation rose to 9.5 percent in September 2018, from 9.3 percent registered in August 2018 and 8.4 percent in September Food inflation rose marginally by 0.1 percentage point to 10.2 percent while non-food inflation increased by 0.2 percentage points to 8.9 percent. 1

6 2.0 EXTERNAL SECTOR 2.1 Foreign Exchange Reserves Foreign exchange reserves stood at US$689.2 million in September 2018, adequate to cover import bill of 3.3 months. Foreign exchange inflows amounted to US$78.3 million in September 2018, lower than US$90.4 million recorded in August The decline was largely explained by a reduction in foreign exchange purchases from the market as well as project funds. Foreign exchnage purchases dropped to US$2.0 million from US$12.5 million in the previous month, while project funds inflows declined to US$14.0 million, from US$21.1 million recorded in the preceding month. In contrast, outlays of foreign exchange increased to US$103.3 million in September 2018 from US$93.3 million in the previous month. 2.2 The Malawi Kwacha Exchange Rates The Kwacha remained broadly stable against the US dollar and euro but marginally lost value against the British pound during September The local currency traded at K per US dollar and K per euro. Whilst against the pound, the kwacha lost value by 1.1 percent to trade at K The depreciation was explained by a firmer pound due to improved investor confidence as the UK anticipates favourable outcome from the brexit negotiations. In the Asian region, the kwacha emerged stronger than most of the currencies of the trading partners. The appreciation of the kwacha was on account of weakening of most ermeging market currencies due to spillover effects from the trade war between China and US. Consequently, the local currency gained ground by 2.0 percent against both the Japanese yen and Indian ruppee to trade at K6.41 per yen and K10.02 per indian rupee, respectively. Similarly, the kwacha firmed up against the Chinese yuan by 0.6 percent and traded at K per yuan. In the SADC region, the performance of the Malawi kwacha was rather mixed. The local currency depreciated by 6.4 percent against the South African rand to trade at K52.92 per rand. The depreciation was explained by relatively stronger rand on account of an anticipated hike in the repurchase rate by the South African Reserve Bank (SARB). Against the Zambian kwacha, the local currency gained value by 16.5 percent and traded at K59.37 per Zambian kwacha. The appreciation of the domestic currency was explained by a weaker Zambian kwacha due to increased demand for foreign exchange in Zambia and the general strengthening of the US Dollar among other factors. 2

7 3.0 BANKING AND FINANCE 3.1 Broad Money and its Components Annual growth rate of money supply (M2) increased to 15.5 percent in September 2018 from 11.0 percent in August 2018 and 14.2 percent in September The increase was driven by growth in Net Domestic Assets (NDA) amounting to K128.1 billion year-on-year, mainly following expansion of banking system credit to the domestic economy. On a month-to-month basis, M2 decreased by K150.2 million (0.01 percent) to K1,140.6 billion. The outcome was explained by a slowdown in narrow money (M1) amounting to K47.4 billion to K517.8 billion. Both components of M1, namely, demand deposits and currency in circulation declined in the month as the agricultural season bottomedout. In particular, demand deposits declined by K40.5 billion to K325.9 billion whereas currency in circulation fell by K6.9 billion to K191.9 billion. In contrast, quasi money (QM) grew by K47.3 billion to K622.8 billion, almost entirely offsetting the decrease in M1. The surge in QM was on account of both term (time and savings) deposits and foreign currency deposits which rose by K28.4 billion and K18.7 billion to K394.5 billion and K228.3 billion, respectively (Table 1). Consequent to the above developments, the contribution of M1 to the annual growth rate of M2 decreased to 4.2 percent from 8.3 percent recorded in the preceding month whereas the share of QM increased to 11.3 percent from 2.7 percent in the previous month. Table 1: Money Supply and its Sources (in MK billion, unless otherwise stated) Sep Dec Mar Apr May Jun Jul Aug Sep Money Supply (M2) , , , , , , , ,140.6 Narrow money (M1) , Quasi-money Net Foreign Assets Net Domestic Assets Domestic Credit , ,027.2 Government (Net) Private Sector Other Pub. Sector Other Items (Net) Annual M2 growth (%) Monthly M2 growth (%) Reserve Money Money Multiplier Source: Reserve Bank of Malawi 3

8 3.2 Counterparts to Broad Money On the assets side, the monthly drop in M2 was on account of Net Foreign Assets (NFA). NFA of the banking system decreased to K330.1 billion (US$453.9 million) from K364.1 billion (US$501.4 million) and K404.9 billion (US$558.1 million) in August 2018 and September 2017, respectively. Meanwhile, NDA expanded by K33.8 billion to K810.5 billion Net Domestic Assets The monthly growth in NDA of the banking system was entirely on account of growth in other items net (OIN). OIN grew by K47.8 billion to minus K216.7 billion, largely on account of maturing commercial banks Repurchase Agreements (REPOs) with the RBM. Domestic credit, in contrast, contracted by K13.9 billion to K1,027.2 billion in September Domestic Credit The slowdown in the banking system s domestic credit was solely a result of net repayment by the central government. In particular, banking system s net credit to government decreased by K30.4 billion to K546.3 billion. The decrease was, however, partly offset by growth in credit to statutory bodies and to the private sector amounting to K8.7 billion and K7.7 billion to K33.6 billion and K447.3 billion, respectively. i. Credit to the Private Sector Credit to the private sector continued to register positive growth in September 2018, a trend that started in February In particular, private sector credit grew by K7.7 billion to K447.3 billion in the month compared to a growth of K1.0 billion and K19.7 billion in August 2018 and September 2017, respectively. Commercial and industrial loans, individual/household loans and foreign currency denominated loans grew by K4.3 billion, K3.5 billion and K2.7 billion to K184.9 billion, K119.4 billion and K130.5 billion, respectively. Meanwhile, mortgages contracted by K4.4 billion to K42.1 billion in the month. In terms of economic sectors, K7.6 billion, K6.0 billion and K1.5 billion were extended to the Agriculture, Manufacturing and Transport, storage and communications sectors, respectively. Meanwhile, credit to the Wholesale and retail trade sector contracted by K9.4 billion in the month. However, in terms of proportions of the total private sector credit, Wholesale and retail trade sector at 25.6 percent continued to represent the largest share. Agriculture, Manufacturing and 4

9 Community, social and personal services sectors claimed 21.1 percent, 20.0 percent and 10.3 percent of the total outstanding credit stock, respectively (Chart 1). Chart 1: Sectoral Composition of Private Sector Credit Source: Reserve Bank of Malawi ii. Credit to the Public Sector The banking system s net credit to the public sector (government and statutory bodies) totaled K579.9 billion as at end September 2018 from K601.6 billion and K468.6 billion in August 2018 and September 2017, respectively. Government net credit from the monetary authorities decreased by K59.7 billion to K279.7 billion in the month, following a drop in Ways and Means advances amounting to K60.4 billion. Government accessed a total of K45.8 billion through Ways and Means advances and repaid K106.2 billion in September Consequently, the outstanding stock of Ways and Means advances went down to K1.5 billion from K61.9 billion in August Meanwhile, government deposits with the central bank declined by K704.0 million to K152.6 billion. In contrast, net credit to government from the commercial banks recorded a monthly growth of K29.3 billion to K266.6 billion. Commercial banks holding of Treasury notes and Treasury bills rose by K34.0 billion and K5.3 billion to K145.1 billion and K190.7 billion, respectively. Meanwhile, loans and advances declined by K6.9 billion to K29.0 million and government accumulated deposits amounting to K3.2 billion in the month, thereby moderating the growth of net credit to government. 5

10 Commercial banks also extended credit to statutory bodies amounting to K8.7 billion. Consequently, the stock of credit to the state-owned enterprises stood at K33.6 billion as at end September This is in contrast to developments in September 2017, which saw a contraction in credit to statutory bodies of K6.3 billion to K9.7 billion Net Foreign Assets NFA of the banking system contracted by US$47.5 million to US$453.9 million on account of a drop in NFA of the RBM to US$376.3 million from US$433.2 million in August RBM utilised a total of US$103.3 million foreign exchange against total sources amounting to US$78.3 million during the month. Consequently, gross official reserves stood at US$689.2 million, adequate to cover import bill of 3.3 months. In contrast, commercial banks NFA grew by US$9.4 million to US$77.6 million as at end September This outcome was explained largely by a fall in commercial banks liabilities to the foreign sector. Overall, total banking system foreign exchange reserves stood at US$834.2 million (4.0 months of imports) compared to US$890.9 million (4.3 months of imports) in August CENTRAL GOVERNMENT BUDGETARY OPERATIONS Central government budgetary operations for the month of September 2018 shifted to a surplus of K3.8 billion, following a dificit of K45.5 billion recorded in August Total government revenues amounted to K115.2 billion against total expenditures of K111.4 billion. 4.1 Revenues 1 Total government revenues for the month of September 2018 rose to K115.2 billion compared to K86.8 billion mobilised in August 2018 and K80.4 billion registered in September The increase in revenue largely emanated from increased domestic revenues as foreign receipts declined during the month under review. Domestic revenues amounted to K104.9 billion whilst foreign receipts totalled K10.3 billion (US$14.0 million). Grants received in the month of September 2018, comprised K2.4 billion (US$3.4 million) from International Development Association (IDA) for the Agriculture commercialisation project of the Ministry of Agriculture Irrigation and Water 1 Revenue figures may slightly differ with those reported by the Malawi Revenue Authority as RBM records represent data actually remitted into the consolidated account on a particular transfer date. 6

11 Development, K2.1 billion (US$2.8 million) from International Bank for Reconstruction and Development (IBRD) for the Roads Fund Administration, and K1.5 billion (US$2.0 million) from International Fund for Agriculture Development (IFAD) for the financial access for rural markets and small holders project. The remaining K1.8 billion (US$2.4 million) were grants towards various government projects. Foreign inflows therefore dropped by K5.2 billion (US$7.1 million) from K15.5 billion (US$21.1 million) received in August Table 2: Central Government Budgetary Operations (in MK billion) Sep Dec Feb Mar April May Jun July Aug Sep Total Revenues Domestic Revenues Tax Revenue Non Tax revenue Departmental receipts Other Receipts Grants Total Expenditures Recurrent Expenditure Interest Payments Domestic Foreign Development Deficit/Surplus Financing (net) Foreign Domestic Banking System Non-Bank Sector Errors and Omissions Source: Reserve Bank of Malawi 4.2 Expenditures Total expenditures on the other hand, declined by K20.8 billion to K111.4 billion in September This contrasts sharply from a K53.8 billion increase in government outlays recorded in August The decrease in total expenditures recorded in the review month was observed in both recurrent and development components. Recurrent expenditures decreased by K17.9 billion to K95.8 billion while development expenditures recorded a decrease of K2.9 billion to K15.6 billion in the month. 7

12 5.0 PRODUCTION AND PRICES 5.1 Domestic Production Tobacco Sales The 2018 tobacco marketing season closed on 27 th September 2018 after running for 26 weeks from 9 th April The volume of tobacco sales increased by 89.6 percent to million kilograms in 2018 from million kilograms produced in This is also 36.7 percent more than the projected tobacco production in 2018 of million kilograms. Of the total volume sold, burley tobacco constituted 81.2 percent, flue-cured and Northern Division Dark Fired (NDDF) tobacco accounted for 16.0 percent and 2.4 percent, respectively, while Southern Dark Fired (SDDF) tobacco constituted 0.4 percent of the total volume. A total of million kilograms of the tobacco (76.6 percent) was sold under contract system, which is slightly below the target of 80 percent stipulated in the Integrated Production System (IPS). The total volume of sales through the auction system was 47.3 million in 2018, higher than 11.8 million kilograms auctioned in The higher volume of sales was reflective of increased production in 2018 that was driven by higher prices fetched in the preceding season. According to Tobacco Control Commission (TCC), farmers produced more than the stipulated quotas for In addition, there was improvement in farming techniques due to increased access to extension services. Consequently, productivity per hectare increased. It was also reported that there was improved leaf quality and low levels of rejection in the 2018 marketing season. Tobacco prices averaged US$1.67 per kilogram in 2018, representing a drop of 16.2 percent from an average price of US$2.00 per kilogram fetched in Flue cured tobacco prices fetched the highest price and averaged US$2.25 per kilogram, even though it was comparably lower than US$2.92 per kilogram fetched in Average prices for Southern Division Dark Fired (SDDF) tobacco and Northern Division Dark Fired (NDDF) tobacco stood at US$1.73 per kilogram and US$1.60 per kilogram, respectively, against respective average prices of US$1.79 per kilogram and US$1.75 per kilogram registered in the preceding season. Burley tobacco was sold at an average price of US$1.56 per kilogram, lower than US$1.77 per kilogram last season. The decline in average prices this year was explained by increased production. Total realization from the 2018 tobacco sales amounted to US$337.5 million, representing an increase of 58.8 percent from US$212.5 million realized in At this level, the 2018 tobacco earnings contributed 1.6 months of prospective import cover compared to 1.0 months import 8

13 coverage in The relatively higher tobacco earnings were explained by the relatively higher volumes in 2018 than in Of the total proceeds, US$277.6 million (82.2 percent) was realized through contract sales whereas US$59.9 percent was realized through auction sales Tea Auction Sales Tea production amounted to 3.6 million kilograms in September Tea sales through the Limbe auction market amounted to 0.46 million kilograms in September 2018 compared to 0.48 million kilograms auctioned in September Tea prices averaged US$1.38 per kilogram during the month under review compared to US$1.98 per kilogram fetched in a corresponding month in the preceding year. Realisations from the tea sales totalled US$0.6 million, higher than US$1.0 million realised in September Sugar During the month of September 2018, sugar production amounted to 26.4 million kilograms while the volume of domestic sales amounted to 3.2 million kilograms. Total domestic realisation was K2.2 billion. Meanwhile, 3.8 million kilograms of sugar valued at K1.9 billion was exported during the review month. 5.2 Domestic Prices Inflation rose for the third consecutive month in September However, the pace of increase has been slowing down. Headline inflation edged up by 0.2 percentage points to 9.5 percent in September 2018 from 9.3 percent recorded in August The September 2018 inflation rate was higher than 8.4 percent recorded in September 2017, reflecting rising prices of food and non-food items. Food inflation rose marginally by 0.1 percentage point to 10.2 percent while non-food inflation accelerated by 0.2 percentage points to 8.9 percent. Reflecting lower agricultural production this year, food inflation increased slightly to 10.2 percent in September 2018 from 10.1 percent in the previous month. Maize prices continued to rise, albeit at a slower rate following the announcement that Government will distribute food aid across deficit areas. On average, maize prices rose to K per kilogram in September 2018 from K in August 2018, compared to a monthly increase of 7.2 percent recorded in August Going forward, maize prices are expected to moderate, supported by government s free maize distribution efforts. 9

14 After remaining constant at 8.7 percent for two consecutive months, non-food inflation rose by 0.2 percentage points to 8.9 percent in September Inflationary pressures largely resulted from second round effects of upward adjustments in electricity tariff of 7.1 percent effected in August, and in fuel pump price of 9.3 percent in July. Nevertheless, the outturn was lower than 11.6 percent registered in September Looking ahead, headline inflation is expected to continue rising in the next few months. Inflationary pressures will emanate from the 20 percent electricity base tariff increase and 5 percent fuel pump price hike, both effected in October Pressure on maize prices is expected to continue, albeit moderately in view of government s announced food support programme. Notwithstanding the upward risks to inflation, external developments remain favourable as the kwacha exchange rate to the US dollar is projected to remain broadly stable and global oil prices are forecast to moderate and average US$69.38/barrel in 2018 and US68.76/ barrel in MONEY AND SECURITIES MARKET 6.1 Open Market Operations In September 2018, net Government operations resulted into a net withdrawal of K26.99 billion. This was a net result of Government net expenditure position of K19.80 billion and a withdraw of K46.79 billion through net issuances of Government domestic debt securities. On the other hand, K12.00 billion was withdrawn through net foreign exchange operations in September On the other hand, net open market operations injected K94.58 billion into the financial system. Overall, a net of K55.59 billion was injected into the financial system (Table 3). 10

15 Table 3: Financial Market Operations (in billions of Malawi Kwacha) (K bn) Apr May Jun Jul Aug Sep (Net operations supplying liquidity +) Net Government Operations (+=injection) Net Government Position excluding grants Revenue MRA Non-tax Expenditure Net Government Domestic Borrowing TB/TN/PN issues TB/TN/PN maturity Net Forex Operations Sales Purchases Net OMO Injections RBM bill maturities Maturity of 3-YR RBM bond Purchase of securities Maturity of OMO T-bills Maturing Deposits on Deposit Facility Access on the Lombard Facility Repo maturities Withdrawals RBM bill issues Issue of Monetary Policy TBs Issue of RBM bond Deposits on Deposit Facility Sale of securities Maturing Access on the Lombard Facility Repos Net Operations Reserve Money Estimate: Currency in Circulation Bankers Deposits Reserve Money Target Reserve Money Over (+)/Under (-) Performance Source: Reserve Bank of Malawi Government Securities Market Treasury Bills Primary Market Subscriptions on Treasury bill auctions during the month of September 2018 totaled K53.13 billion. The 91 day tenor was the least subscribed as it attracted 12 percent of the funds. On the other hand, the 182 and 364 day tenors attracted 46 percent and 42 percent, respectively. A sum of K35.29 billion was allotted across all tenors. The allotment distribution mirrored the 11

16 distribution of subscriptions. The 182 and 364 day tenors were allotted 46 perecent and 41 percent, while the 91 day got 13 percent. On the other hand, treasury bills maturities for the month stood at K20.19 billion, comprising of normal Treasury bills as there were no maturities of treasury bills from ways and means conversions. Therefore, there was a net issuance of K15.09 billion. Consequently, the stock of Treasury bills closed the month at K billion from an opening position of K568.4 billion. Table 4: Treasury Bills Issuance and Maturity Total Subscription Issues Normal TB from Conversion Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep Maturities Normal TB from Conversion Net Issues (+)/ maturities(-) T-Bill stock at Face Value Memorandum Items: Conversions T-Bill stock at Cost Value Source: Reserve Bank of Malawi Treasury Bills Yields Average yields stayed put for all tenors except for 91 day which slightly rose to percent from the previous month s percent. Thus the 182 and 364 day average yields remained at 14.5 percent and percent, respectively. Consequently, the all type average yield slightly rose to close at percent from previous month s position of percent. (Chart 2). 12

17 25 Chart 2: Treasury Bills Yields 20 Percent Source: Reserve Bank of Malawi 91 day yield 182-day yield 364-day yield All type yield Treasury Notes Market In the month under review, a 3 year Treasury note worth K6.22 billion matured. Nonetheless, this was outweighed by the issuance of 2-year Treasury note worth K64.66 billion at an average yield of percent. Thus treasury notes had a net issuance of K58.44 billion. Consequently, the stock of Treasury notes closed at K billion. 6.3 Inter-bank Money Market Banking system liquidity marginally dropped in September 2018 compared to August The daily average un-borrowed excess reserves for September 2018 closed at negative K3.53 billion compared to K3.17 billion that was recorded during the preceding month. Consequently, access on the Lombard Facility increased to an average of K10.20 billion per day in September 2018 from K7.66 billion per day recorded in August On the contrary, traded volume on the interbank market dropped to an average of K8.40 billion per day in September 2018 from K9.16 billion per day in August 2018, suggesting a better distribution of funds in the banking system. Hence to the tighter liquidity condition alluded to above, the interbank market rate (IBR) increased to percent and the end of September 2018 compared to percent that was recorded at the end of August

18 (K bn) Table 5: Banking System Liquidity Mar Apr May Daily Average Total Reserves Daily Average Required Reserves Daily Average Excess Reserves Daily Average Un-borrowed Excess Reserves Daily Average Inter-bank Market Trading Daily Average Lombard Facility Access Inter-bank Market Rate (End Period, Percentage) Source: Reserve Bank of Malawi 6.4 Interest Rates The monetary authorities maintained the policy rate at 16.0 percent in the quarter. Similarly, commercial banks left their interest rate structure unchanged in the month, with the average base lending rate and the average savings rate at previous month s rates of percent and 8.39 percent, respectively. June 2018 July 2018 Aug 2018 Sep 2018 Table 6: Interest Rate Structure Dec Jan Feb Mar Apr May Jun Jul Aug Sep Policy Rate Base Rate mon Fixed Rate Savings Rate Interbank Rate Minimum Maximum All Type Treasury bill Yield Days Days Days Mortgage (min) Source: Reserve Bank of Malawi 14

19 7.0 CAPITAL MARKETS 7.1 Stock Market Primay Market The primary market remained dormant as there was no listing. The number of listed companies therefore stood at Secondary Stock Market The secondary stock market recorded an increase in value of shares traded despite a decline in number of shares traded during the month under review. A total of million shares earning K3, million traded compared to million shares earning K3, million in the previous month. This development represented a percent decline in volume of share trades and a percent increase in turnover. The increase in turnover despite a drop in volume of share trades was due to high-value shares accounting for a larger proportion of shares traded when compared to the prior month. The share volume and value both declined when compared to the corresponding month of the previous year in which million shares changed hands at a total consideration of K4, million. The Malawi All Share Index (MASI) gained points and closed off the month at 32, points resulting in a monthly return on index of 1.30 percent. The increase in MASI resulted from an increase in the Domestic Share Index (DSI) despite a drop in the Foreign Share Index (FSI). The DSI closed higher at 21, points in September 2018 from 21, points in August 2018 while the FSI closed lower at 8, points from 8, points (refer to Chart 3 below). The increase in DSI was on account of share price gains on Blantyre Hotels plc (BHL), National Bank of Malawi plc (NBM), MPICO plc (MPICO), NBS Bank plc (NBS), National Investment Trust plc (NITL), Press Corporation plc (PCL) and Telekom Networks Malawi plc (TNM) counters despite a share price loss on NICO Holdings plc (NICO) counter. The decline in FSI was on account of a share price loss on FMB Capital Holdings plc (FMBCH) counter. 15

20 Chart 3: Trends in DSI, FSI and MASI Source: Malawi Stock Exchange Total market capitalisation closed higher at K1, billion in September 2018 from K1, billion recorded in the previous month. The increase was due to the share price gains on seven domestic counters despite share price losses on one domestic counter and one foreign counter. Domestic market capitalisation closed higher at K1, billion during the review period from K1, billion in the previous review period. The increase was on account of the share price gains. On the other hand, foreign market capitalisation declined to K billion from K billion on account of the share price loss. In dollar terms, total market capitalisation stood at US$1.97 billion during the period under review compared to US$1.95 billion in the previous review period. In the corresponding period of 2017, the total market capitalisation stood at US$14.45 billion. The decline in total market capitalisation between the two periods was due to delisting of Old Mutual plc (OML) counter which, in September 2017, had a market capitalisation of US$13.11 billion. The foreign counter delisted on 29th June

21 APPENDIX Real Sector Table 7: Selected Economic Indicators (in billions of Malawi kwacha unless otherwise stated) Sept 2018 Sept Population (million) GDP at current market prices 1, , , , , , , ,270.0 Real GDP growth (percent) GDP per capita (K 000) GDP per capita (US$) Consumer Price Index (CPI) Average annual inflation rate (percent) Fiscal Sector Total Revenue Domestic Revenues Grants Total expenditure , Recurrent Development Deficit/GDP ratio (after grants) Monetary Sector Net Foreign Assets Net Domestic Credit ,027.2 Government Statutory bodies Private (gross) Money Supply (M2) , ,140.6 M2 Growth Rate (annual percent) Reserve Money Banks Deposits External Sector Overall Balance Current Account Exports (fob ) Imports (fob) Trade balance Capital account balance Gross foreign exchange reserves Official Commercial banks Import cover (Official reserves in months) Current account balance/gdp (percent) Debt/GDP (percent) Debt Service/Exports (percent) MK/US Dollar (eop) MK/US Dollar (pd avg) Source: Reserve Bank of Malawi =100 for the years and 2012; 2010= 100 for the years 2010, 2011 and

22 Table 8: Year on year Inflation (2012=100, 2017=100) All items Food & Non-alcoholic Non-food inflation Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: National Statistical Office 18

23 Table 9: National Consumer Price Indices (2012=100, 2017=100) All items Food & Nonalcoholic Alcoholic drinks & Tobacco Clothing & Footwear Housing, water & electricit y Furnishing & Household Health Transp ortation Commu nication Recreation & Culture Education Restauran ts & Hotels Miscellan eous Weight Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: National Statistical Office 3 From Jan 2018 base year is 2017 (i.e. 2017=100) 19

24 Table 10: Selected Exchange Rates US dollar Euro British pound Japanese yen SA rand ZMK Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell Jan Feb Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: Reserve Bank of Malawi 1 Averages of daily rates quoted by the Reserve Bank for dealing with commercial banks in Malawi 20

25 Table 11: Malawi All Share Indices (1999=100) Period INDICES RETURN SHARE TURNOVER CAPITALISATION Domestic Share Index Foreign Share Index All share Index Dividend Yield Earnings per Share (Kwacha) Volume of shares traded Value (Malawi Kwacha) Value of shares issued (Malawi Kwacha) , , , ,355,317,369 48,592,086, ,522, , , , ,895,390 6,196,059, ,516, , , , ,894,283 13,516,146, ,609, Jan 11, , , ,795,087 99,852, ,516, Feb 11, , , ,830, ,507, ,509, Mar 10, , , ,067,001 89,521, ,473, Apr , , ,962, ,512, ,448, May 10, , , ,578, ,536, ,446, Jun 10, , , ,499, ,580, ,460, Jul 10, , , ,822,509 79,415, ,471, Aug 10, , , ,384, ,792, ,462, Sept 10, , , ,146, ,695, ,525, Oct 10, , , ,601, ,416, ,527, Nov 10, , , ,318,065 1,385,112, ,497, Dec 10, , , ,888,673 1,606,116, ,516, Jan 10, , , ,462, ,523, ,508, Feb 10, , , ,896, ,654, ,530, Mar 11, , , ,057, ,460, ,679, April 11, , , ,160, ,100, ,706, May 12, , , ,859,658 1,343,060, ,786, June 12, , , ,562,635 1,065,495, ,794, July 13, , , ,820,088 1,759,096, ,856, Aug 15, , , ,516,315 1,587,733, ,390, Sept 15, , , ,482,149 1,325,916, ,488, Oct 15, , , ,346,580 2,108,221, ,494, Nov 15, , , ,395, ,567, ,547, Dec 16, , , ,335,455 2,047,314, ,609, Jan 16, , , ,519,356 1,318,037, ,661, Feb 17, , , ,801,275 7,696,394, ,827, Mar 18, , , ,059,770 1,133,690, ,435, Apr 18, , , ,903,126 3,676,838, ,654, May Jun Jul 19, , , , , , , , , ,730,032 6,468,082 13,787,978 10,613,139, ,441, ,259, ,006, ,370, ,385, Aug 21, , , ,722,958 3,009,473, ,416, Sep 21, , , ,090,165 3,758,351, ,434, Source: Malawi Stock Exchange 21