Mr. Kwabena Nyarko, a Financial Market Analyst and the CEO of Pipliquidator Fx has opined that the performance of the Ghana Stock Exchange (GSE) in the past three months shows that animal spirit has returned to the local bourse.
Mr Nyarko, in an interview with the Vaultz News on the recent performance of the GSE, where it emerged as the best performing Exchange on the continent in the past three months, noted that confidence and hope have returned to the Ghana Stock Market.
“It Is not surprising that the GSE tops other Exchanges in the sub region, because judging by the past months of action in the stock market, indeed it appears the animal spirits have returned to the Ghana Stock Exchange. Gains accelerated across the broader market in the months under review.”Mr. Kwabena Nyarko
The analyst further explained that if spirits are low on the local bourse among investors, then confidence levels will be low, which will drive down a promising market—even if the market or economy fundamentals are strong. “Likewise, if spirits are high, confidence among participants in the economy will be high, and market prices will soar,” he explained.
The financial analyst noted that the Ghana stock market gains in the last three months have been rosier than the entire periods in the previous year. This alone, he said, raises the risk for a spill in prices.
Meanwhile, Mr Nyarko noted that after a decent, though uneven, run for stocks from June through to the end of August, the stock market forecast for the final quarter of the year remains mildly bullish. However, he acknowledged that things can change quickly for the worst.
“Howbeit, the sanguine outlook for Ghana Stock Exchange could darken quickly if investor expectations for corporate earnings, interest rates and stability of the banking industry take a turn for the worse.”Mr. Kwabena Nyarko
GSE Outlook for the Final Quarter
Mr Nyarko, while highlighting the outlook of the local bourse in the final quarter noted that inflation and interest rates loom large in the outlook.
“Inflation, interest rates and the exchange rate will likely continue to dominate the outlook in the final quarter and these elements will be key influencing factor. The headline CPI reading was up higher for the third month running to 43.1% in July 2023, up from 42.5% in the prior month and well above the central bank’s target band of 6% to 10%.
“It was the steepest inflation rate in four months, with the cedi experiencing some volatility during these months. While we wait for the announcement of the August figures, it will likely affect the outlook.”Mr. Kwabena Nyarko
It can be recalled that Ghana Stock Exchange (GSE) made a significant comeback from its recent poor performance by beating the Nigerian Stock Exchange (NSX) to become the best performing Exchange on the continent in the last three months.
In the last three months ending August, 2023, the Ghana Stock Exchange recorded 22.84 per cent year-on-year performance to emerge the first. In comparison, the NGX recorded 19.33 per cent, followed by Malawi, which stood at 15.79 per cent.
Giving perspective to the development, it can be seen that the equities market resilience reflected heightened investor optimism for domestic growth with renewed hope by promulgation of long-needed policies.