Last week was a week of sell-side action across the local equities market, however, going into the new week, analyst Ms Gifty Annor-Sika, a financial market expert and the President of Women in Forex Ghana, in an interview with the Vaultz News, has predicted this new week to be characterized with mixed trading activity.
According to the analyst, the financial sector failed to live to the expectations last week which made it lose some significant market indices. However, she predicted that the new week will correct it.
“Last week closed out bearish as sell-side interest overshadowed demand with trades in the banking sector uninspiring in the face of the weak sentiment in that space.
“Going into this new week, I expect mixed sectoral performance to end the month of April amid further slight recoveries in the banking sector amid cherry-picking activities.”
Ms Gifty Annor-Sika
In the benchmark index, the Equities Market reversed the previously recorded losses to close the final trading session of the week on a positive note. The GSE-Composite Index rose by 1.97%, while the GSE-Financial Stocks Index declined by -2.31% last week.
Ms Annor-Sika explained that the divergence in performance between the two indices highlights the differences in the sectors that they represent. Meanwhile, the GSE-Composite Index is a broad-based index that tracks the performance of all listed equities on the Ghanaian stock exchange, while the GSE-Financial Stocks Index specifically measures the performance of financial stocks listed on the exchange.
The GSE-Financial Stocks Index’s decline by -2.31% over the course of last ween, bringing the index’s year-to-date performance to a disappointing -14.43%. Ms Annor-Sika who is also the Ambassador to TDMARKETS, indicated that the performance of the financial sector suggested that the financial sector has been hit hard by the recession scare which hit the banking sector in some countries overseas, coupled with the current economic challenges facing the country. She thus, called for policy interventions to support the sector and boost investor confidence.
Meanwhile, during last week, a total of twenty-four equities traded on the Ghanaian stock exchange, with MTNGH, TOTAL, and GOIL recording gains of GH¢0.06, GH¢0.03, and GH¢0.01 respectively. However, SIC and some other notable blue chips declined and others traded flat.
The total volume and value of shares traded during the week decreased by -86.18% and -77.56% respectively, indicating a slowdown in investor activity. GCB traded the most volumes, valued at GH¢417,192.30, representing 41.37% of the week’s traded value.
Explaining the decline in the volume and value of the activities, Ms Gifty Annor-Sika suggested that investors may be cautious in their dealings on the Ghanaian stock market, “possibly as a result of the current uncertain economic conditions and weak economic fundamentals in the country”.
Businesses Leveraging on GSE to Scale Operations
Amidst the cherry-picking, Ms Annor-Sika noted that it is a better time for businesses to access the opportunities available on the stock exchange to raise cheap long-term capital for their operations.
“Conventionally, across the globe, capital markets offer an interesting opportunity for businesses that are looking to raise capital for medium to long term financing of their activities. The stock exchange trade fills in as a monetary go-between among investors and businesses listed on its floor. I entreat businesses to list on the Ghana Stock Exchange to take advantage of the patient capital over there to scale up.”
Ms Gifty Annor-Sika
Explaining further, the Analyst noted that the stock exchange is regarded as a trading post that links businesses to a large pool of local and foreign investors who are constantly searching for interesting investment opportunities.
“Consequently, these investors are anxious to boost their return on investments (ROI) and will put their monies in stocks that have favourable profit projections. The advantage for businesses on an exchange is that they can get huge capital at lower cost.”
Ms Gifty Annor-Sika
Ms Annor-Sika advised local businesses to tap into the ample pool of retail and institutional investors on the stock exchange to drive their growth aspirations.
The financial market expert further asserted that the capacity of these businesses to access funds promptly would positively rub off on economic growth. “It would revamp the employment generating capacity of the ordered private sector and subsequently impact the gross domestic product level”.
Meanwhile, the performance of the Ghana stock exchange in the first quarter of the year was quite impressive compared to that of last year. It is the hope of many investors and market watchers that this quarter will be even more better.
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