The stock market posted gains this Wednesday, February 10 led by a surge in Information and Communications Technology (ICT) and the banking sector stocks despite an increase in cases following the second-wave of the coronavirus pandemic and its associated economic difficulties.
The benchmark GSE- Composite index which is based on the volume weighted average closing price of all listed stocks advanced by 0.66% adding 13.79 points to a new year high of 2,092.97 with a 7.80% year-to-date return to investors following gains in three companies including MTN Ghana, Cal Bank and GCB Bank.
Likewise, Gains in CAL (+3.90%) and GCB (+0.23%) stocks pushed the GSE financial Stock index which constitutes only listed stocks from the financial sector including banking and insurance sector stocks, notched 0.20% higher to close at 1,869.17 with a 4.85% year-to-date return to investors.
Market capitalization, which captures the total market value of all outstanding shares, hence, determining the worth of various companies listed on the local bourse, also increased by 0.26% to settle at GH¢56.02 billion from GH¢55.88 billion.
However, trading activity declined as a total of 64,048 shares valued at GH¢54,911 changed hands compared to 1,319,478 shares valued at GH¢939,341 at the last session. MTN Ghana dominated trading activity for the third straight session, accounting for 66.47% of total value traded.
The money market also showed signs of a pickup with treasury bills and bond receiving high oversubscriptions at the beginning of the year. Recent weekly auction recorded 96% oversubscription showing boost in investors’ confidence and a possible interest in the short end of the market.
This however, can be as a result of a flight to safety by most investors due to the volatility in the market currently owing to the resurgence of the pandemic which appears to be more delicate.
Additionally, non-resident investors may want to purchase our financial instruments as rates look attractive on our financial markets with the cedi also remaining stable recording no depreciation last month.
Analysts hold that there is going to be a rebound in economic activity, with most economists projecting a growth rate of around 4 percent this year, coupled with an improvement in investor confidence alongside a compelling market valuation which may drive the demand for stocks across the telecommunication, banking, insurance and oil sectors.
Results from the Bank of Ghana’s latest confidence surveys conducted in December 2020 showed improvements in both consumer and business confidence with companies meeting short-term targets and some increasing their earnings, hence the likelihood for people to start patronizing equities and other securities.
Additionally, updated Composite Index of Economic Activity (CIEA) from the Central Bank recorded an annual growth of 11.9 percent in November 2020, compared with 3.4 percent growth a year ago, showing strong economic prospects.
Although, analysts seem to be more bullish about stock market predictions as seen in the first month of the year and the pace of economic recovery appears to be improving following vaccine optimism and a fairly stable cedi, volatility is expected to stay high in the near term due to concerns of the new strain of the coronavirus. So, as investors plan their portfolio strategies for 2021, it suggests that amid the global crises, investors might have to exercise caution.