Nene Lomo Nartey, Head of Trading and Sales at Ecobank Development Corporation (EDC) has asserted that with a more stable cedi and improving economy, this is likely to attract foreign investors to patronize Ghana’s stocks, boosting the Stock Exchange performance this year.
Also, EDC projects that as the economy keeps improving, this may lead to the benchmark Ghana Stock Exchange Composite Index to gain as much as 15% on the local bourse this year. So far in 2021, Ghana’s benchmark index is up 7%: hence, the country’s stock markets is likely to pick up in 2021 after three consecutive years of declines with expectations of local bank and oil-company shares to be in demand.
“We’re getting out of the trough,” Nartey said, adding that “Across the board with a lot of the stocks, you see that demand is exceeding supply and the least that comes with that is going to be people willing to pay a little premium.”
Nene Lomo Nartey further opined that “Foreign demand began returning in the last quarter and we think that will be sustained by the government’s commitment to get Covid-19 vaccines, which raises the prospects for economic recovery.
“The cedi’s depreciation against the dollar in 2020 was the slowest in 14 years and government and central bank efforts to extend this positive momentum are likely to continue. EDC expects the economy to expand by 4.5% this year, compared with a government forecast of 5.7%.”
Highlighting on the resilience of the financial sector due to the cleanup, Nartey mentioned that local lenders are in a healthy state following a sweeping of the sector that started in 2017 that saw scores of lenders and micro-credit companies shut down.
It is anticipated that GCB Bank Ltd., Standard Chartered Bank Ghana Plc, Ecobank Ghana Plc and Enterprise Group Plc will post gains this year because investors are beginning to see value in these stocks, Nartey noted.
“There’s a lot of demand for GCB, but not many sell offers, because people are optimistic about the financial sector.
“When you’re looking for Ecobank Ghana and Stanchart, you don’t get all the volumes you want to purchase”.
Nene Lomo Nartey
Touching on the Oil sector, Nartey revealed that Oil Marketing Companies (OMCs) have returned to pre-pandemic levels of operation, and Ghana Oil Company and Total Petroleum Ghana Plc are trading at attractive entry points.
Giving his views on the performance of other stocks mainly food and beverage as well as Information, Communications and Technology stocks on the local bourse, Nartey disclosed that Fan Milk Ltd.’s results were impressive.
However, Unilever Ghana Plc may be among the laggards, because it’s struggling to grow core revenue and Guinness Ghana Breweries Plc may underperform because of its debt profile.
For Scancom Plc, the local unit of MTN Group, Africa’s biggest wireless carrier, it’s a strong buy because the pandemic increased demand for its services with MTN dominating trade in January, he added.
