GSE-CI Dips by 19.8% Year-on-Year

The Ghana Stock Exchange Composite Index (GSE-CI), a key performance indicator of stocks on the local bourse, has recorded a year-on-year dip of about 19.8 percent in its growth.

This was captured in the Bank of Ghana’s latest summary of financial and economic data released in September 2020.

According to the Bank of Ghana, the GSE-CI has seen consistent declines from the end of the first quarter to date. The GSE-CI stood at 2159.6 at the end of the first quarter and decreased to 1899.9 in the second quarter, representing a decline of about 12 percent.  The GSE-CI reduced further to 1846.6 in the middle of third quarter. More so, the GSE-CI declined from 2303.8 in August 2019 to 1846.6 in August 2020, indicating a drop of approximately 19.8 percent year-on-year.

A quarterly bulletin released by the Bank of Ghana on Monday, October, 12,2020, indicated that the sudden decline in the key performance indicator of stocks on the local bourse was a result of investors minimizing their exposure to risk from the adverse impact of the COVID-19 pandemic. This led to a decrease in market capitalization by 5.4 percent.

“The GSE-CI was adversely impacted by COVID-19 as investors sought safe-haven assets to minimize their risk exposures. Consequently, market capitalization decreased by 5.4 percent”.

Again, from the quarterly report, the poor performance of the GSE-CI was due to significant losses in the value of stocks contribution from certain key sectors in the economy. A breakdown of these sectors showed that the food and brewery sector recorded the highest loss of about 37.9 percent and was followed behind by IT with 13.2 percent, and then Agriculture, Finance and Distribution sectors with 12.3 percent, 10.3 percent and 8 percent loss in value respectively.

“The poor performance of the GSE-CI in Q2:2020 was mainly as a result significant loss in value of stocks in the Food & Brewery (-37.9%; -450.38 points), Agriculture (-12.3%; -70.00 points), Distribution (-8.0%; -183.59 points), Finance (-10.3%; -197.88 points) and IT (-13.2%; -3.26 points) sectors”.

The statement of the Bank of Ghana’s quarterly bulletin further asserted that the decline in the GSE-CI was moderated by gains in the stocks of the Manufacturing sector and the value of GLD, an ETFund sector stock by 0.2 percent and 12 percent respectively. Most investors resorted to the GLD because it was safer and would reduce risk exposure.

“However, the Manufacturing sector stocks gained 0.2 percent (3.30 points), as some investors envisaged a pick-up in production and consequently a marginal improvement in profits due to the easing of lockdown restrictions imposed by the Government to reduce the impact of COVID-19. The slip in the GSE-CI in Q2:2020 was also moderated by an impressive gain in value of GLD, an ETFund sector stock (12.0%; 31.05 points). GLD attracted investors as investors sought refuge in the “safe haven” asset”.

The quarterly bulletin went on to say that “The Mining, Education and Advertisement & Production sectors recorded no changes during the review quarter”.

In conclusion, this suggests that the GSE-CI has still not picked up as it records consistent declines even after the easing of the restrictions imposed at the peak of the COVID-19 pandemic.