Mr Isaac Kwasi Mensah, a Corporate Finance Research Analyst at SIC Brokerage, has predicted that he expects early trades this week to be dictated by bargain hunting in stocks, which dragged the market last week.
The analyst, In an interview with the Vaultz News, indicated that the performance of the Ghana Stock Exchange (GSE) will be mildly bullish in the new week owing to buying well established stocks at lower prices.
“Following last week’s rollercoaster performance of the Ghana Stock Market characterized by losses and gains in the market, I expect performance in early trades this week to be driven by bargain hunting in stocks which dragged the market in prior trading sessions.”Mr Isaac Kwasi Mensah
Mr Isaac Kwasi Mensah explained that when it comes to bargain hunting, it is not just about the level of the market. He noted that more often than not, bargain hunting advice boils down to buying the well established stocks at lower prices.
“That is, of course, part of the story. But, you will be surprised to know that bargain hunting is actually not all that complicated. At least, it is nothing like rocket science! In fact, you yourself can indulge in effective bargain hunting by following some basic ground rules.”Mr Isaac Kwasi Mensah
More Light on Bargain Stocks
Throwing more light on bargain stocks and the possibility of a good stock declining due to bad markets, the analyst noted that it is the basic building block to identifying bargain stocks.
“Remember, when there is a market correction overall, your bargain stocks are not going to be spared. When you have identified a bargain stock and the stock corrects, the first question you need to ask is whether there is any structural problem.
“We have seen stocks like Produce Buying Company (PBC) falling vertically for months, but there were larger structural problems in these companies. No point in bargain hunting in such stocks. Firstly, be clear that the stock you are tracking has fallen only in sympathy with the larger market and its fundamentals are not impacted in any way.”Mr Isaac Kwasi Mensah
The analyst indicated that while weekly sentiment indicator reduced to 1.4 points from 1.6 points recorded last week due to a decline in market breadth, he also expects sentiment in some stocks that contributed to Market Indices, to remain weak as investors sell down ahead of the final quarter of the year.
Mr Isaac Kwasi Mensah, while highlighting last week’s performance, noted that even though the market performance last week was largely positive with marginal gains overall, the all-share index, coupled with market activity declined, signifying the decline in investor interest.
MTN Emerges As the Top Pick
Mr Kwasi Mensah, meanwhile, picked MTNGH as his top stock for the week, saying that the telecommunication giant currently has a 14-day relative strength index near the oversold region, hence presenting opportunities for capital appreciation and gains.
The analyst offered his advice to investors, saying that “the moral of the story is that bargain hunting is not as complex as it is made out to be”.
“You just need to understand some basic rules but more importantly, you must have the patience and conviction to hold on for the long haul. These rules may not help you identify a multi-bagger but will surely help you to recognize one when you come across a potential bargain next time.”Mr Isaac Kwasi Mensah
Putting last week’s performance into perspective, the GSE composite Index (GSE-CI) inched up marginally with 5.34 points to close at 3,145.33 points translating into a YTD return of 28.70%.
Similarly, the GSE Financial Stock Index (GSE-FSI) gained 9.20 points to close at 1,953.13 points translating into a YTD return of -4.85%.
Twenty-four (24) equities traded over the week, ending with four (4) gainers and (2) price losers.
BOPP, ACCESS, EGH and GCB advanced, earning GH¢0.37, GH¢0.03, GH¢0.10 and GH¢0.01 to close at GH¢19.00, GH¢3.40, GH¢5.40 and GH¢3.51 respectively. GOIL and RBGH lost GH¢0.02 and GH¢0.04 to close trading at GH¢1.50 and GH¢1.58, correspondingly.
As a result, the market Capitalization grew substantially by GH¢58.05 million to close the trading week at GH¢73.95 billion.