The performance of major stock indexes continue to depict lows on the Ghana Stock Exchange (GSE).
Also, this is despite expectations of investors’ sentiment to improve following the vaccination programme. For instance, President Akufo-Addo said “Government expects economic activity, which has already picked up, to do so even further, following the ongoing vaccination exercise”.
The benchmark GSE- Composite index has declined, closing at 2203.16 points. Currently, it’s returning 13.47% to investor’s year-to-date as against 13.72% last week. This index is computed based on the volume weighted average closing price of all listed stocks.
Likewise, the GSE financial Stock index’s performance slid due to a loss in ETI stocks. This index constitutes only stocks from the financial sector including banking and insurance sector stocks. It has dipped approximately 9 points to close at 1,856.06 with a 4.11% year-to-date return to investors.
The market capitalization also hovers around GH¢57.06 billion. It captures the total market value of all outstanding shares on the local bourse. Also, investors can use it to determine the worth of various companies listed on the stock exchange.
Moreover, the market cap is simple and effective for risk assessment. As such, it can be helpful to investors in deciding which stocks to purchase. Also, investors can find ways to diversify various portfolio with companies of different size, said Jason Fernando, a Value Investing Specialist.
Expert’s opinion on stock performance
Mr. William Mensah, an Investment banker and non-Executive Director with Ecobank Capital made these comments in an interview with the Vaultz Media:
“It is because our market is not that efficient… Historically…our markets respond most to financial results. When companies release good financial results…the investor public react.
“News that you expect the market to react to they don’t react to. It is a feature of market inefficiency.
“It is…a symptom of a bigger problem of the market not being very active and therefore, inefficient.”Mr. William Mensah
Stock Performance So far
So far, stocks recording gains on the local bourse from the beginning of the year include: MTN Ghana (29.69%) Cal (20.29%), Societe Generale (15.63%), Stanchart (11.28%), GCB (11.11%), Republic Bank (9.76%), Total (9.54%), Enterprise Group (1.43%) and GOIL (0.67%).
The performance of the stocks of Access Bank Ghana Plc (-2.05), Unilever Ghana Plc (-9.89%), Aluworks (-9.09), and New Gold (-4.64%) continue to remain low. Also, market confidence in Ecobank Transnational Incorporated (ETI) has come down considerably joining in with a -12.5% return.
Subsequently, the arrival of vaccines coupled with a compelling market valuation, Analysts predict that this may drive the demand for stocks. Notably, stocks across the telecommunication, banking, insurance and oil sectors. Also, as companies release their full year results showing some increase in their earnings and the ability to meet short-term targets, the stock market is likely to pick up.
Analysts seem to be more bullish about stock market predictions as the pace of economic recovery appears to be improving. Despite vaccine optimism and a fairly stable cedi, volatility is expected to stay high in the near term. Also, rate of inflation has surged.
So, as investors plan their portfolio strategies for 2021, it suggests that amid the global crises, investors might have to exercise caution.
“We expect GDP growth to rebound strongly this year to nearly five percent (5%), above the IMF’s 2021 January projection of 3.2% growth for Sub-Saharan Africa for 2021”President Akufo-Addo