The Head of Research at Databank, Alex Boahen has intimated that Ghana’s elections to be held on Monday, 7thDecember 2020 will have dire consequences for the stock market as the outcome will significantly inform the investment decisions of the general investing public.
“After next week, we will have a clearer picture of where the market is heading. This will give us some indication of what we are likely to see in the market in 2021
“There are investors waiting to come back to the market in order to take advantage of the current attractive market valuations; however, they are waiting to see the outcome of the 2020 general elections,” Mr. Boahen remarked.
Currently, on the Ghana Stock Exchange (GSE), market value declined marginally falling to GH¢53.1 billion in the first week of December from GH¢56.79 billion at the start of the year, representing a decrease of approximately 6.5 percent and translates into a total amount GH¢3.69 billion loss in capitalcumulatively in the year 2020.
By the end of trading this week, the year-to-date return on the GSE Composite and Financial stock Indices were negative hovering around -19.36 percent and -19.51 percent respectively.
This unexpected performance is on the back of factors including the lingering effects of the financial sector crisis and the current global pandemic, Mr. Boahen whined adding that in a similar vein, foreign investor holdings have dropped across most emerging markets including Ghana, largely due to the de-risking of their portfolios following the coronavirus pandemic that hit the country early this year.
The rate of decline in the performance of the exchange has slowed down since the second quarter “when the upcoming election is over, the market will begin to see some level of improvement in sentiments, leading to a positive recovery in the performance
“The market saw its worst performance in the second quarter when it lost over 12 percent of its value. During the first quarter, the GSE lost about 4 percent; however, this has declined consistently to about 1 percent in November,” Mr.Boahen disclosed.
Currently, MTN stocks have been the main driver in terms of market activities with volume and value levels of 9610600 and GHS5, 862,466, respectively at a price of 0.61, topping the chart as volume and value leaders.
“On a week-on-week basis, MTN stocks account for more than 70 percent of the values and volumes of shares traded on the market. However, this has not really reflected in the wholesome performance of the market,” the Databank Research Head opined.
