After a stormy 2022, the Ghana Stock Exchange (GSE) gained during the first quarter of 2023 in a surprise show of resilience despite uncertainty about what’s ahead for the economy. However, Mrs Ruth Ofori, a financial analyst and the Chief Executive Officer (CEO) of Lolyfx LTD, noted that the first quarter performance, though laudable, is too early to celebrate.
In an interview with the Vaultz News, Mrs Ruth Ofori explained that nothing about the first quarter’s performance was linear. Explaining further, she intimated that the broad-based index seesawed throughout the quarter, ending January on a low note before tumbling further in early February, rising again in March and ultimately ending the quarter up in positive.
“There’s no doubt that the Ghana Stock Exchange benchmark index made a remarkable resurgence in the first quarter of the year after the 2022 setbacks for the market. In quarter one, investors sought out less risky avenues to ride out turbulence and uncertainty of the government bonds. This helped the market a lot as focus was shifted to the stock market. The performance was commendable but it is too early to celebrate as the market is still in the recovery mode.”
Mrs Ruth Ofori
According to the analyst, the uncertain economic environment of the past quarter such as inflation and depreciation that rocked the stock market still exist. “Though some investors rushed to find safer alternatives to the uncertainty of the bond market, the dynamics could play differently in the subsequent quarters of the year”.
“So, despite the first quarter’s strong performance, celebrating a GSE recovery victory would be premature. Rising prices remain a key factor driving markets and could cause turbulence ahead, even if it’s not cataclysmic.”
Mrs Ruth Ofori
The Second Quarter Outlook
Mrs Ruth Ofori admitted that the bad economic performance sent the market teetering, but noted that in the second quarter, stock prices will rise as investors wager that the Central Bank won’t substantially increase the policy rate in consonant with inflation rates.
“The outlook in quarter two is in two folds. I just don’t think that we’re going to get inflation down without seeing pain in the market. So, in order for it to stabilize, I think firstly we probably have to give some of these rallies back. So, the second quarter will be more like a rollercoaster ride which will be characterized by gains and losses.”
Mrs Ruth Ofori
All in all, Mrs Ruth Ofori remains confident that the equities space will maintain its recovery throughout 2023, following its performance in the first quarter of the year 2023.
Meanwhile, the Ghana Stock Exchange concluded a topsy-turvy yet winning first quarter of 2023, overcoming initial shocks of 2023. The Ghana stock market, as measured by the Ghana Stock Exchange Composite Index (GSE-CI), closed the quarter strongly with 2,745.33 points – its highest since January 2022 and in the process returning 12.9% to investors, compared to the -12.38% at beginning of the quarter.
The stock market, being the closest alternative to fixed-income securities coupled with the comparatively high level of liquidity and low entry cost, the equities market was bound to benefit the most.
It was witnessed first hand the diversification capabilities of investors as they become increasingly becoming aware of the need to diversify in order not to miss out.
The market has been propelled by stocks from three sectors – ICT/telecommunication (MTN), oil marketing (Total) and manufacturing (Benso Oil) and a late push by Unilever.
By the end of March, MTN’s stock had risen by 43.2% to GHC1.25 from its starting price of GH¢0.88, making it the third-best performing stock on the GSE for the year. Over the last four weeks, the stock gained 35% – topping all other stocks on the GSE during that time.
According to official data, MTN Ghana had the most active trading volume of any stock on the GSE over the past three months, with a total volume of 171 million shares valued at GHC156 million and averaging 2.71 million traded shares per session.
Despite the broader market’s positive performance, investors have continued to stay away from financial stocks – resulting in an 11.98 percent drop in the GSE-Financial Stocks Index (GSE-FSI) since beginning of the year to 1,806.67 points.
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