A Financial Advisor to Geldex Invest, Ms Gifty Annor-Sika Asantewah, has bemoaned the slow start of performance of the Ghana Stock Exchange in 2022, noting that the rising level of inflation, depreciation of the cedi and other economic indicators are badly affecting the performance of the Ghana Stock Market.
According to the analyst, the stock market has gone through some challenges in recent years but managed to bounce back last year. However, she observed that 2022 has not started as predicted, which can “partly be blamed on the pandemic and declining confidence of investors.”
“Many markets are under distress due to the pending pandemic that slowed investment. As such, that may be just one of the reasons why trading activities declined in the first few months of 2022… That being said, the Ghana Stock and investment terrain for past few years has gone through some dramatic scrutiny that has left some investors overwhelmed with low market confidence and trust.”Annor-Sika Asantewah
Miss Annor-Sika however, explained the reason why some major stocks such as: Fan Milk LTD, MTN Ghana and others that performed brilliantly last year, 2021, are now struggling this new year 2022.
“Investors are more likely to purchase or trade stocks if they feel or are convinced the stocks or the market instrument will increase in value in the future. Currently, few stocks such as, SIC Insurance Company PLC and others are doing relatively well, while others like MTN Ghana, Fan Milk Limited, Unilever and some banking stocks are not doing well…Looking at the statistics, foreign investors holdings on equities market dipped. The Ghana Stock Exchange’s report on fund managers holdings for February showed that foreign investors contributed 82.0% of equity market trades as of end of February 2022 in comparison to 86.6% for the same period in 2021. Concerns over inflation, depreciation of the cedi, high interest rates, and other economic indicators is gradually driving foreign investors away from the Ghanaian stock market. These indicators affect how money is spent by investors. They [investors] are making certain ‘safer’ investments a more attractive alternatives to stocks.”Annor-Sika Asantewah
Slow Level of Technology in GSE
The financial advisor expressed worry over the slow level of technology being adopted by the Ghana Stock Exchange. She noted that the Ghanaian equities market is behind when it comes to technological advancement.
“The impact of disruptive technology on capital markets is as significant as fire was to the cavemen. In fact, technological progress in capital markets offer investors the opportunities to boost flexibility, scale efficiencies and reduce complexity in how the market operates. It is time that leaders in the industry embrace new-age technologies which are further going to transform the Ghanaian capital markets ecosystem in the upcoming years. Stock markets are embracing new technologies and innovations. Many are shifting from the conservative stock market trading to digitalization which the Ghana stock exchange is yet to embrace. I hope that the market expands to other innovative instruments beyond just stocks, shares and bonds to attract more traders and investors.”Annor-Sika Asantewah
Miss Annor-Sika observed that investors are gradually changing tastes in regards to trading activities, types of stocks to indulge and how it should be done. She thus, predicted that the performance of the Ghanaian stock market might further plummet in the coming weeks and months.
“Frankly, the performance of the Ghanaian bourse might worsen due to the uncertainties facing our monetary and fiscal policies this year coupled with increment in taxes. Unfortunately, the cedi is on a downward spiral and thus, eroding investors confidence.”Annor-Sika Asantewah
Miss Annor-Sika moreover, sided with Bloomberg Africa’s prediction that the invasion of Ukraine by Russia is likely to further hurt Africa’s coronavirus ravaged and fragile economies through fiscal constraints, weaker investment flows and higher costs. The pronounced challenge, she noted, will have implications on inflation in the country.
Meanwhile, the Ghana Statistical Service (GSS) announced that inflation has accelerated to 15.7% in February 2022 compared to 13.9% in January.