This week will be the last trading week of the month, quarter, and first half of the year, and with the late push of the Ghana Stock Exchange (GSE), market participants are upbeat and eyeing a happy ending to the first half of the year on the Ghana Stock Market.
With the recent resurgence, the month of June is promising to be the best month of the year so far. Historically, whenever the index is up at least 10% year-to-date as of the end of June, the index ended the year higher 82% of the time, gaining 7.7% on average.
The penultimate week of the month proved to set the tone for the month of June likely ending in adulation. Last week alone, the Ghana Stock Exchange (GSE) manifested commendable strength and resilience during the week, as indicated by significant gains in its key performance metrics. The GSE-Composite Index surged by 3.40 percent, while the GSE Financial Stocks Index recorded a modest advance of 0.20 percent.
These positive movements contributed to the year-to-date performances, with the GSE-Composite Index reporting 11.97% growth, while the GSE Financial Stocks Index displayed a decline of -17.45%.
Rising interest rates and a downturn in consumer confidence is a bad combination for the Ghana Stock Exchange earnings growth. However, while the economic outlook for 2023 remains uncertain, the rising indices is a positive sign for investors to be optimistic in June and beyond.
Moreover, given that the stock market is on a tear, investors are faced with a tricky question: Will the rally last? After a series of interest rate increases by the Bank of Ghana to contain historically high inflation, many investors feared that the Central Bank’s drastic actions would push the country into a more severe downturn. This fear was juxtaposed by the sudden rise in inflation which was preceded by a series of declines.
Despite the gains, some investors aren’t convinced while an expert in an interview with the Vaultz News a fortnight ago warned that the recent rise could be a bear market rally — a short-lived stretch of optimism within a longer-running trend downward. That could be the case because the bulls base their argument on signs of a resilient economy and cooling inflation.
Reasons Why Market Watchers are Still Optimistic
One reason why market watchers are still optimistic is that the fear of missing out on bumper returns as stocks continue to rise could also attract investors on the sidelines back into the market, extending the rally as they join the buying spree.
Meanwhile, the positive movements on the Accra bourse contributed to the rise in year-to-date performances, with the GSE-Composite Index reporting 11.97% growth, while the GSE Financial Stocks Index displayed a decline of -17.45%.
Stimulating investor confidence, the GSE witnessed a substantial rise in market capitalization, which soared by GH¢940.36 million from the previous week to close at GH¢68.27 billion. This impressive increase reflects growing investor enthusiasm and underscores the market’s robustness.
The notable equities responsible for late push of the local bourse are NewGold ETF (GLD), Guinness Ghana Breweries Limited (GGBL), MTNGH, Cal Bank (CAL), and Fan Milk Limited (FML). They emerged as top gainers, with their share prices experiencing noteworthy increases of GH¢0.20, GH¢0.19, GH¢0.07, GH¢0.04, and GH¢0.01, respectively.
Trading activity demonstrated a robust upward trend during the week, with a total of 1,900,358.00 shares exchanging hands, valued at GH¢8,320,821.93. These figures represent a remarkable increase of 49.37% in volume traded and an impressive surge of 96.70% in value traded compared to the previous week.
As market experts and investors alike closely monitor the evolving dynamics of the Ghana Stock Market, the market’s positive outlook suggests continued opportunities for market participants to capitalize on the thriving Ghanaian equities landscape, especially as the month of June heads for its final lap.
This notwithstanding, there are lingering fears about a potential recession later in 2023. For now, investors are taking hope from the decent gains as the second quarter draws to a close, setting the table solid for end of June.
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