A number of readers have been wondering about how to open a brokerage account on the Malawi Stock Exchange.
I can understand why. The little market in Blantyre posted the best return of any sub-Saharan stock exchange in 2013. Its All Share Index is up 75.2% over the past 12 months in US dollar terms.
Performance like that would make even the most jaded of investors take notice.
So, what do you need to do to put money to work in the warm heart of Africa?
Here’s how to get started.
How to Open a Malawian Brokerage Account
Four brokers are licensed to trade on the Malawi Stock Exchange. You can find contact details for each of them here.
I emailed all of them, asking if they accepted foreign investors, how much they required to open an account, and what documentation was necessary in order to do so.
The only response I received came from African Alliance Malawi.
You’ll note that the stock exchange website doesn’t include an email address for them, so try sending your account opening query to this one: email@example.com. Make sure to specify that you’re interested in opening a Malawian trading account.
African Alliance does, in fact, accept foreign investors and doesn’t require a minimum amount before opening an account. But they do require some documentation.
As an investor, here’s what you will need to provide them:
1) A certified copy of your passport or driver’s license
2) Proof of your residential address – e.g. a recent utility bill
3) A recent bank statement for the account that will be your source of funds
4) And a completed African Alliance account opening form.
Fund Your Account
After opening your trading account, your broker will provide you with its bank details so that you can send funds. The most efficient way to do this is via wire transfer. If you haven’t sent an international wire before, I suggest that you take your broker’s bank details to your local bank branch and ask them to walk you through the process. They’ll make sure that your funds arrive securely. Note that most US banks charge about $25 for outgoing international wires.
Trading Costs and Taxes
Before you begin buying and selling Malawian stocks, be sure you understand the trading costs involved.
Malawian brokers charge commission on a sliding scale based on the value of the transaction. For amounts greater than MWK100,000 (approximately $250), however, the commission amounts to 1% of the total value traded.
There is also a government surcharge of 17.5% on the amount of this brokerage commission. And a flat exchange fee of MWK50.00 per transaction.
So, for a transaction of MWK1,000,000 (approximately $2500) expect to pay roughly MWK11,800 worth of commission and fees (about $30.00).
There are also some taxes to take note of, too. Malawi levies a 10% withholding tax on dividends paid to non-residents and capital gains are taxed at a rate of 30% unless the stock has been held for more than seven years.
Submitting a Trade Order
Now it’s time to do some research into the various companies listed on the exchange to figure out where the best opportunities lie. Your broker can likely provide some guidance here, but if you’re more of an independent sort and want to conduct your own research, the financial statement library should give you a few numbers to crunch.
After identifying your hot stock pick, it’s time to tell your broker to buy it for you.
All that needs be done is to submit a written trade instruction. Some brokers may have a special trade mandate form to complete, but, for others, a simple email may suffice.
Keep in mind that many shares listed on the Malawi Stock Exchange are rather illiquid, so I advise specifying a limit price for all of your orders. This will help you avoid paying significantly more for your shares than you had intended to pay.
Your broker will then execute your trade and send you a contract note that specifies the buy or sell price, commissions, and fees. Settlement of share trades takes up to five business days after the trade date in Malawi, so if you’ve sold shares, don’t expect to receive the proceeds of a sale before then unless you’re willing to incur a penalty to settle the trade more quickly.
Follow these steps and you’re all set to begin investing in Malawian stocks. That wasn’t too bad, was it?
The process of opening a foreign brokerage account can be confusing. If you found this walk-thru to be clear as mud, please don’t be shy. Post your questions in the comments, and I’ll do my best to get answers for them.
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35 thoughts on “How to Invest on the Malawi Stock Exchange”
l really appreciate your effort towards getting investor informed on how to go about out an /a Malawian Brokerage account.Thanks.
Thanks, Ibitayo. I’m glad you found it useful!
so much exciting about investing in malawi through this,what is the minimum kwachas to start with.how secure are the funds?
This is great. But how do i get a reliable broker? Do we need to meet physically or on the net
Thanks, Samuel. It’s not necessary to meet in person. I’ve opened most of my brokerage accounts remotely.
In Malawi, I’ve noticed that brokers take a bit of time to respond to questions from individual investors, but they are all licensed and regulated to help ensure they treat their customers fairly.
I’m 23 years old and just graduated from college. I was born in the united states, but my parents are from Cameroon. I make a reasonable salary and want to invest back in Africa. The malawian stocks are just what I need. What should I do?
Great to hear that you’d like to invest directly in Africa. Do you have a connection to Malawi? If so, you can follow the steps in the article above.
If your geographic interest in Africa is more general, I would suggest that you open a brokerage account in one of the more active markets like South Africa, Nigeria, or Kenya. These markets are more accessible than Malawi’s.
Here are some step-by-step guides to opening accounts on each of them.
Let me know if you have any questions after reading through those posts.
All the best,
Ghana is a good option too. I can help you open a brokerage account. You can fund your account even when in the states and directly trade on the Ghana Stock Exchange without asking a broker to trade for you. Ryan, I want to start investing on JSE, although I’m yet to read your JSE article, are there applications that can make me trade directed after i funded my account??
I think you meant the broker fee was MWK11,800 no? MWK11,750+50 not MWK1,175+50 no?
Whoops! You’re right. Thanks, Peter! I’ll correct the article.
Considering the various currencies and exchange rates a potential investor will have to deal with, what is a straight forward way to figure out the performance (for any investment) over time?
I was thinking keeping all calculations in U.S Dollars (I live in the states) would give a a fixed reference point…Does that make sense?
Thank you for The great website.
It seems like Malawi has too many fees(restrictions) even by African standards.
The returns have to be significantly high to justify the fees and taxes.
This is so helpful. I’m now expanding my focus to Africa and hence will be relying on most of your post.
That’s great news, Peagama. I always look forward to your posts.
wow thanks Ryan for the heads up…this is really useful
I’m happy to hear that. Thanks, Yvonne.
Am A malawian Junior Civil Selvant I Hav No Knowledge About Stock Exchage But Iwant To Understand It Is That You Are Suposed To Pay Money Every Month? And How Do You Get Proft?
Hi, I would like to know if you invest MK2000000, how much profit will you earn per year?
Good question. Unfortunately, there are no guarantees when it comes to investing in shares. At the end of the year, the value of your MK2,000,000 investment could actually be worth less than what you started with.
But there’s also a chance that the value of your shares could increase in value (perhaps significantly if the company performs well). There’s also a chance that the company will pay a cash dividend to its shareholders.
So, in short, be aware that investing in shares does not guarantee a positive return, and don’t invest money that you can’t afford to lose.
Here’s an article that explains a bit more how investing in shares can build wealth over time:
Hope this helps and happy investing!
Make sure you ask the brokers about getting exchange control approval before you invest in Malawi. I am finding out the hard way that repatriating your money back from Malawi can be tricky. Apparently not all brokers know to declare all incoming funds and make sure they have the correct paperwork done for when you need to get your money out. It can be a lot of running around just to get simple stuff done. It is a lot easier to invest in South Africa than in Malawi in terms of moving your investment funds in and out of the country.
Many thanks for this, Simon. You’re now the second investor I’ve heard that’s run into this problem in Malawi.
Hello Ryan, What’s the smallest reasonable amount that one can possibly begin to invest with on the Malawi Stock Exchange?
There isn’t a minimum amount required to begin investing on the MSE. But when you purchase shares, you must purchase at least 100 at a time. As of today, the share with the lowest price is TNM at K5.03 per share. Therefore, your minimum investment amount would be K503.00 + brokerage and fees of roughly K55.00.
Am a student at Malawi College of AccountNancy I want to purchase 100 shares from TNM so please help me and provide me with relevant contacts that I can buy the shares please am serious and all what i can do Mr.
I suggest that you contact Stockbrokers Malawi about opening a trading account. You can find their contact details here:
At present, 100 shares of TNM will cost you K250,000 plus commission and fees of roughly K5,000.
Let me know if you have questions and best wishes!
In Malawi Kwacha ofcourse?
Hi Ryan ,
Hope you can help me here.
We are listing one of our local Company’s on the Malawian Stock Exchange shortly.
As i understand it, a foreigner can purchase shares in the Company, and on selling can transfer the monies out of Malawi. This investor must however be able to prove the floe of money into Malawi and have a strict audit trail.
Malawi have very strict Exchange Controls.
What would the position be for us being the founders of the Company ?
We would be allocated shares in the Company as founders.
If we sell some shares would we be able to transfer the money out ?
Dont have proof of money going in, just got allocated the shares ?
Perhaps know the position ?
You’ve stumped me. If you haven’t already done so, I would check with your home country’s embassy or high commission. They may be able to advise on how easy it is for founding shareholders to remit money. If not, they may know someone at the Reserve Bank who can assist.
Sorry I wasn’t able to be of more help. Good luck with the listing!
i would like to trade in a fungible share such as the Old Mutual Stock on the MSE. Please confirm l can buy this share on the MSE and sell it to other markets such as the JSE or LSE
Good question. Yes, I believe that it is possible to buy Old Mutual on the MSE and sell it on the JSE. But check with Stockbrokers Malawi or another Malawian broker to confirm.
Thank you so much for taking your time to answer people’s questions.I must tell you that I have learned quite a lot.Basically I would like to buy stakes in some big companies in Malawi South Africa Zambia Zimbawe Mozambique and Botswana.I leave in the UK How do I go about it.please if you knw can you explain to me
I’m so glad that you’re interested in investing in African stocks. To invest in Malawi from the UK, you can follow the same steps as those outlined above. You may need to send some original documents via post which adds some time and complication to the process, but once the account is set up, it’s relatively easy to conduct business with your broker via email.
If you’re not necessarily looking to open a brokerage account in each of the countries that you listed, and simply want an easy way to invest some money in large African companies from your UK brokerage account, I would suggest that you look into the db x-trackers MSCI Africa Top 50 Index ETF. It’s a cost efficient way to get exposure to companies like Safaricom, South Africa’s Naspers, and Nigeria’s Guaranty Trust Bank.
Way to go Ryan! Your article is very helpful…keep up the good work. The warm heart of Africa has alot to offer
I notice that your original post was in 2013.
Does your confidence in the Malawi Stock values still hold true?
You are the best, thanks for the info. I am interested. Keep up the good work.