Gifty Annor-Sika Asantewah, a financial analyst and advisor to Geldex Invest, has predicted that the eventual roll out of the e-levy will have surging consequences on the Ghana Stock Exchange (GSE) in the short run.

According to the analyst, many local investors got caught in a bears trap at Ghana Stock Market since the government started the implementation of the e-levy, noting that investors should gear up for more bearish run, especially this week and the subsequent ones.

“The announcement of the e-levy saw a bearish run in the telecommunication stocks, particularly MTN Ghana stocks few months back as investors sentiments dampened. Now if you watch the market, there is a surge in market activity as a result of the implementation of the electronic levy… In the interim, the stock market will suffer the more as investor will rush to avoid more liabilities by liquidating stock assets.

“MoMo users are running to Mobile money operators and banks to cash out moneys to avoid exorbitant charges on transactions. This is definitely causing a panic and the telecom sector stocks will continue to go down till further notice.”
Gifty Annor-Sika Asantewah

Miss Annor-Sika observed that though the e-levy did not have immediate impact on the nation’s biggest telecommunication stocks- MTN Ghana, it might nosedive this week.

“It is a bit surprising that the telecommunication sector stocks, particularly MTN stocks showed some unusual resilience in the first three days after implementation of the e-levy by recording no change in share prices. However, the increased in the trading activity means that it might be actually winding up for a big fall in the coming days. You can see that the MTN shares is currently priced at GH¢1.00. I am pretty sure it will fall below the 1 cedi mark in the coming days.”
Gifty Annor-Sika Asantewah

The Cause of the Unusual Resilience of MTN Stocks

The financial advisor to Geldex Invest, moreover, attributed the unusual resilience to the fact that because the issue of the e-levy was going on for months and weeks before it was finally implemented, investors were prepared and made decisions on what to do with their shares long before the implementation finally kicked in.

“Another reason for the MTN Ghana shares not going down immediately after the implementation may be due to the long periods of the e-levy impasse. Most investors may actually took decision on their investment long ago. If you remember, MTN before the budget was read was doing well. It was one of the fastest growing stocks with share price of around GH¢1.80. But since the budget reading and the subsequent announcement of the electronic levy, MTN sector stocks plummeted to the current 1 cedi it finds itself. It is no coincidence that it lost over 70 pesewas in that short period. Profit taking Investors may have taken their profit long ago.”
Gifty Annor-Sika Asantewah

Total Volume and Value to Decline

Ms Annor-Sika added that the E-levy will cause a decline in the total volume and value of transactions since Ghanaians are not in favor of the tax. “Definitely, the total transactions will definitely go down. It is no coincidence that the revenue target from the e-levy was revised downward. Government knows this will happen.”

Though the analyst was of the view that taxation forms a major part in government revenue mobilization, she stated that government should have listened to Ghanaians in this regard and look elsewhere to raise revenues.

“Taxation is a legitimate way to enhance an economy, but the current rise in standard of living against stagnating wages and widening brackets of low income earners and downsizing makes the timing very problematic.

“Auditor general revealed that $340million was lost to financial mismanagement, corruption, etc. Government should have looked at sealing those loopholes and other means of raising revenue.”
Gifty Annor-Sika Asantewah

Ms Gifty Annor-Sika, however, hoped for the best for the local investors, saying that, “We hope the stock market does not crash as fundamental analysis doesn’t look really good now.”