Stocks have bounced back today after closing modestly lower on Tuesday, February 16, on the Ghana Stock Exchange (GSE), a day after major indexes closed at their latest record highs.
The GSE-Composite Index which is based on the volume weighted average closing price of all listed stocks slipped 0.16% to close at 2,174.44 points with a 11.99% year-to-date return for two consecutive days, the benchmark index’s first decline since start of February.
However, after the market falling flat for two days, it has picked up today following gains in Information and Communications Techonology stocks as well as Banking stocks which pushed the GSE-Composite Index 0.14% higher to close at 2,177.43 with a 12.15% year-to-date return.
Likewise, the GSE financial Stock index which constitutes only listed stocks from the financial sector including banking and insurance sector stocks, advanced by 0.29% to close at 1,873.31 points with a 5.08% year-to-date return on the back of gains in Cal Bank (+6.67%) stocks. This also follows after the financial sector also fell flat, closing at 1,867.87 with a 4.77% year-to-date return.
Market capitalization, which captures the total market value of all outstanding shares, hence, determining the worth of various companies listed on the local bourse, also increased by 0.06% to settle at GH¢56.91 billion from GH¢56.88 billion. Given its simplicity and effectiveness for risk assessment, Analysts reveal that the market cap can be a helpful metric for investors in determining which stocks they are interested in, and how to diversify various portfolio with companies of different size
Despite the pickup in both indexes, they, still remain below those recorded at the start of this week. Also, activity levels have declined on the local bourse as a total of 57,616 shares valued at GH¢49,450 changed hands compared to 499,930 shares valued at GH¢534,155 at the last session. As seen for consecutive weeks since the start of the year, MTN Ghana dominated trading activity again accounting for 84.82% of total value traded.
Stocks from the Information and Communications Technology, financial and oil sectors continue to perform well on the stock market. In summary, from the start of the year-to-date gainers on the stock market are MTN (25%), Societe Generale (14.6%), Stanchart (11.28%), GCB (11.1%) and Repbulic Bank (9.76%). The rest are Total (9.54%), Cal (8.70%), Enterprise Ghana (1.43%) and GOIL (0.67%).
Unfortunately, the performance of the stocks of Access Bank Ghana Plc, Unilever Ghana Plc and Aluworks declined recording negative year-to-date return of -2.05 percent, -9.89 percent and -9.09 percent respectively on the local bourse.
Analyst also hold that the demand for bargain stocks that is shares trading at a lower price than a company’s intrinsic value or performance, remain a contributing factor to the gradual pickup in market performance, because, amid the coronavirus pandemic some stocks on the local bourse have been undervalued attracting investors to take advantage of such prices.
Although, analysts seem to be more bullish about stock market predictions as seen in the first month of the year and the pace of economic recovery appears to be improving following vaccine optimism, decline in inflationary pressures and a fairly stable cedi, volatility is expected to stay high in the near term due to concerns of the new strain of the coronavirus. So, as investors plan their portfolio strategies for 2021, it suggests that amid the global crises, investors might have to exercise caution.
