Ghana’s performance on the capital markets has greatly advanced at the start of 2021 as major stock indexes eked out small gains on the stock exchange following a mixed set of reports on the country despite a surge in coronavirus cases that threatens to inflict more damage on an already battered economy.
Major indexes: GSE- Composite Index and GSE- Financial Index picked up on the Ghana Stock Exchange (GSE) to settle at 1955.78 points and 1787.2 points respectively returning 0.73 percent and 0.25 percent to investors in that order.
This follows after investors endured negative returns from the exchange last year with the benchmark index recording year-to-date losses hovering around negative 13.9 percent to close the year 2020 with 1941.59 points.
Compared to the week before elections, these major indexes fell to very low levels hovering around negative 19 percent on the Ghana Stock Exchange.
Total market capitalization surged by 0.33 percent to GH¢54.55 billion from GH¢54.37 billion at the end of the year 2020.
Market improvement was also largely influenced by gains in the financial services sector, information and communication technology services, energy and other sectors which were kept in check and more resorted to amid the global crises.
MTN Ghana stocks led the higher way attaining the feat of volume and value leaders making a total volume and value of 35900 and GHS23,335 at the price of GHS0.65 currently in the new year. Ecobank Ghana and Cal bank also had a strong showing recording high share prices of GHS 7.2 and GHS 0.69 respectively. The energy sector was not left out with Ghana Oil Company Limited (GOIL) amongst the top gainers with a share price of GHS1.5.
Such impressive outcome in the stock market can be attributed to the fact that “investors’ appetite for equity is fueled by the cheap valuations on the market” with about half the issuers totaling 16 to 20 in number are trading at single digit price/earnings (P/E) ratio of 5 or below
Going further, it is anticipated that trading activity is going to continue to boom on the local bourse until the end of the year which will further increase investor confidence in the year 2021. The Ghana stock market is on the edge of erasing the last of the losses taken after the coronavirus pandemic crushed the economy early March last year affecting the livelihood of individuals and businesses.
“For 2021, I expect the GSE to return a positive index by the close of the year. Admittedly this is an optimistic forecast and is contingent on an increase in corporate earnings by the companies on the market and a low-interest rate environment,” Ben Ackah, General Manager of UMB Stockbrokers said.
Despite the improvement, however, the economy is still hobbling as we are yet to attain pre-pandemic levels.
The new year in general has started on a good note with both money markets and capital markets recording gains as investors’ confidence and appetite for various financial asset classes boost accompanied with the vaccine optimism.
