The performance of the Ghana Stock Exchange (GSE) has shown some setbacks for the second-time running since the start of this new week amid an increase in cases following the second-wave of the coronavirus pandemic and its associated economic difficulties.
The benchmark GSE-Composite index which is based on the volume weighted average closing price of all listed stocks remained flat for the second straight session, closing at Friday’s level of 2177.43 points with a 12.5% year-to-date return to investors.
Likewise, the GSE financial Stock index which constitutes only listed stocks from the financial sector including banking and insurance sector stocks, remained unchanged to close at 1,873.31 with a 5.08% year-to-date return to investors for the second time.
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 remained at GH¢56.91 billion.
Analysts hold that the market cap is simple and effective for risk assessment and as such can be helpful to investors in determining which stocks to purchase and ways to diversify various portfolio with companies of different size.
Additionally, trading activity declined considerably as a total of 86,383 shares valued at GH¢110,406 changed hands compared to 3,329,979 shares valued at GH¢2,802,839 at the last session. Ecobank Ghana dominated trading activity taking over from MTN Ghana which stood tall previously, accounting for 45.13% of total value traded.
Despite the decline in stock market performance, banking sector and Information and Communications Technology (ICT) stocks led the market with Ecobank Ghana, Societe Generale Ghana and MTN Ghana topping trades by value.
So far, stocks from the Information and Communications Technology, financial and oil sectors continue to perform well on the stock market. From the start of the year-to-date, gainers on the stock exchange are MTN Ghana (25%), Societe Generale (14.06%), Stanchart (11.28%), GCB (11.1%) and Repbulic Bank (9.76%), 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. New Gold which is an Exchange Tradable Fund (ETF) has also joined with a return of -4.64 percent.
The money market also shows signs of a pickup with treasury bills and bond receiving high oversubscriptions since the beginning of the year. Recent weekly auction recorded an oversubscription showing boost in investors’ confidence and a possible interest in the short end of the market. However, the government rejected some bids worth GH¢531.09 million for the three and six month bills as well as GH¢696.36 million for the 2-year bond.
This however, can be as a result of a flight to safety by most investors due to the volatility in the market currently owing to the resurgence of the pandemic which appears to be more delicate. More so, 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 predict 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. Also, as companies release their full year results showing some increase in their earnings and the ability to meet short-term targets, the stock market is likely to pick up.
