The Ghana Stock Exchange (GSE) witnessed marginal new gains with benchmark indexes edging up as hopes for a COVID-19 vaccine arrival in March counterbalance soaring infection rate from the second wave of the pandemic.
The GSE Composite index gained additional 27.9 points over a week to settle at 2055.02 points as against 2027.12 points at the start of February, and its returning 5.84 percent to investors to date.
Likewise, the GSE Financial Stock Index also increased to 1864.22 points from previous week’s 1861.45 points, representing a slight upsurge of approximately 15 basis points (0.15). So far, this index has also made a year-to-date return of 4.57 percent.
It should however be noted that whereas the calculation of the GSE Composite Index is based on the volume weighted average closing price of all listed stocks, the GSE Financial Index constitutes only listed stocks from the financial sector including banking and insurance sector stocks.
Total market capitalization has hit 55.63 billion from previous week’s 55.33 billion, translating into weekly increase of 53 basis points (0.53%). Notably, last Thursday recorded the highest volume traded for few days into the new month with equities of 17,033,799.
The debt market also shows signs of a pickup with bond receiving high oversubscriptions at the beginning of the year. This however can be as a result of a flight to safety by most investors due to the volatility in the market currently.
Additionally, non-resident investors may want to purchase our financial instruments as rates look attractive on our financial markets with the cedi also remaining stable recording no depreciation last month.
Analysts hold that there is going to be a rebound in economic activity, with most economists projecting a growth rate of around 4 percent this year, coupled with an improvement in investor confidence alongside a compelling market valuation which may drive the demand for stocks across the telecommunication, banking, insurance and oil sectors.
Results from the Bank of Ghana’s latest confidence surveys conducted in December 2020 showed improvements in both consumer and business confidence, hence the likelihood for people to start patronizing equities.
“Consumer confidence remained firm at pre-lockdown levels reflecting optimism about current economic conditions following the gradual lifting of the COVID-related restrictions.
“Business confidence improved significantly, reaching pre-lockdown levels, for the first time, as businesses met short-term company targets and expressed positive sentiments about growth prospects”.
Monetary Policy Report
Additionally, Bank of Ghana’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 11.9 percent in November 2020, compared with 3.4 percent growth a year ago, showing strong economic prospects.
Although, analysts seem to be more bullish about Ghana stock market predictions as seen in the first month of the year, there are still uncertainties related to the resurgence of the coronavirus pandemic which appears to be more delicate than the first wave.
Also, though the pace of economic recovery appears better, it’s not up to expected levels. So, as investors plan their portfolio strategies for 2021, it suggests that amid the global crises investors might want to be careful.
