Bubbling Market Capitalization of the Malawi Stock Exchange

Capital markets provide alternative avenues for investors as storage of value. It is therefore important to ensure that market share prices for listed companies reflect the best possible value for market participants. Overpriced shares benefit a few individuals at the expense of the whole economy and can hinder economic growth and development. The results of this study have shown that three companies have significant impact on market capitalisation with over 40 percent share despite having only 1.78 percent of the total outstanding shares and 0.7 percent of the trading volumes. Consequently, the Malawian capital market could be significantly exposed to shocks which can arise from the top tier companies. It is therefore recommended that appropriate authorities must institute urgent measures to redress the current adverse scenario by decreeing minimum threshold for outstanding shares for each listed company, improvement in corporate governance principles among other measures