Mr. Alex Boahen, Head of Research at Databank, has revealed that the poor performance of stocks on the Ghana Stock Exchange is as a result of poor public sentiments, the fallouts from the banking sector reforms as well as the impact of the novel coronavirus.
The GSE Financial Stocks Index (GSE-FSI) which reflects the average performance of shares of listed financial companies, witnessed a significant drop of about 15 percent from January to August 17, 2020.
Mr. Alex Boahen opined that, despite the gloomy posture of financial stocks, it presents a silver lining to investors.
“The fundamental growth of the banking sector that we have seen from last year and this year, that positive development has not been reflected in share prices. So banking stocks have continued to decline. That, however, is something that in my view is providing an opportunity for investors. The current low share prices do not mean that the companies are not performing well, it is due to poor market sentiments”.
Alex Boahen
The Ghana Stock Exchange recorded a total of more than 262.2 million traded shares valued at ¢194 million in the first six months of 2020 amid the uncertainty of the coronavirus crisis.
The performance, from January to June 2020, represents 107.9 percent growth in volumes and 87.7 percent in value traded for the same period in 2019.
On a month-on-month basis, trading volumes recorded a dip of 16 percent at the end of June after an impressive run in May 2020. Similarly, a volume of 60.74 million shares were recorded at the end of June compared with 72.61 million shares in May.
This resulted in a total value of GH¢ 46.983 million recorded in June 2020 as against ¢47.825 million recorded at the end of May 2020, representing a slight fall of 1.76 percent.
The GSE Composite index at the end of June 2020 continued the downward trend to record a decline of-15.83 percent compared to the-14.01 percent recorded at the end of May 2020.
Again the half-year trade volume of 49,519 million was 89 percent of the total trade volume in 2019,” the Ghana Stock Exchange said.
Mr. Boahen believes that despite the current plunging figures, recovery within the stock market is well within reach as soon as Ghana goes to the polls in December.
“In my view, once we are able to get over this election as well as this COVID, we are likely to see a significant recovery. What I believe is that a successful election will bring some renewed confidence in the market and that will augur well for the performance of the market.”
