The Ghana Stock Exchange (GSE) notched more milestones as the markets largely recorded some positive returns, amid the renewed threat from the second-wave of the coronavirus pandemic which has heightened uncertainty again.
On the local bourse, the benchmark index for all stocks on the entire market, the GSE composite index rose 0.08 percent from 2025. 33 points to settle at 2027.12 points, after bouncing back from a slight slump that knocked it down 0.09 percent last two weeks.
The GSE Financial Stock index which tracks banking and insurance stocks only, also closed at new highs surging 0.17 percent to attain 1861.45 points on the local bourse from 1858.19 points recorded previously.
Both the composite and financial stock indexes maintained positive year-to-date returns on the local bourse with investors gaining 4.41 percent currently.
Analyst ascertain that a rising stock market is usually aligned with a growing economy and leads to greater investor confidence. Investor confidence in stocks leads to more buying activity which can also help to push prices higher.
When stocks rise, people who invest in the equity markets gain wealth. This increased wealth often leads to increased consumer spending, as consumers buy more goods and services when they’re confident they are in a financial position to do so.
As consumers tend to buy more, analyst hold that these businesses which sell these goods and services choose to produce more and sell more, reaping the benefit in the form of increased revenues.
Positive trends on the stock markets can also be seen in total market capitalization which has constantly improved from the beginning of the year to date, inching up 0.02 percent to settle at approximately GH¢55.33 billion.
Trading activity surged as 1,275,653 shares valued at GH¢864,948 changed hands from 70,203 shares valued at GH¢67,950 in the previous session.
Information and Communication Technology stocks and companies that rely on consumer spending helped lift the market, with MTN Ghana dominating trades by volume and value, accounting for 98.76% of the total volume traded and 99.04% of the total value traded at a share price of 0.68.
Market watchers have hinted that current increase in investment on the markets point to a recovery on the stock exchange. Also, a lot of the stocks on the market are undervalued accounting for this boost, as such, presenting opportunities to investors to invest at very low prices.
Additionally, there are projections of quite moderate inflationary pressures this year with both the International Monetary Fund (IMF) and Fitch Solutions forecasting an end-year inflation at an average rate of 8.7 percent and 8.5 percent respectively, slightly above the central target of 8 percent.
With an upsurge in coronavirus cases, there are fears that the stock markets may not produce expected returns for investors. However, in recent weeks, amid the optimism that coronavirus vaccinations will pave the way in coming months for the economy to escape from the pandemic’s grip, markets are likely to pullback strongly.
Finally, the Bank of Ghana has asserted that “In the near-term, financial market indicators point to optimism about medium-term prospects.
“Nonetheless, rising debt levels and increasing interest burdens across several emerging markets and developing economies pose significant financing risks”.
