- The index has gone down this year generally due to the impact of the Coronavirus pandemic on the market and the economy as a whole.
- When the market or the index is going up it means that the average prices of the stocks in the market are also going up.
- Until the Coronavirus is handled in a way, we will continue to see some dropping of prices.
- 260 million shares valued at GHC 194 million have been traded in the first six months of 2020.
Ben Ackah, the General Manager of UMB Stockbrokers, has given profound reasons which accounts for the drop in the stock market, while also giving further elucidation on it dynamics.
“The stock market index is just a measurement of the performance of the market. The composite index in Ghana here measures the index of the market as a whole, while the financial stocks index, measures that of the financial stocks on the market. Now, in general when the market or the index is going up it means that the average prices of the stocks in the market are also going up”.Ben Ackah
Quite significantly, the COVID-19 pandemic has sharply affected every sector globally, as its effects is noteworthy in the closure of most businesses, furlough of staff and crucially the closure of some. As an implication of the pandemic, the plunging figures in the stock market is a testament to its obvious distraction.
Mr. Ackah responds, “Now, the index has gone down this year generally due to the impact of the Coronavirus pandemic on the market and the economy as a whole. Basically the market is a reflection of what’s going on all around us including the economy”.
In Ghana, the stock market has also been affected by the impact of the virus rather badly leaving an impact on the prices of global commodities such as crude oil, gold, and cocoa, which the country largely depends on.
The domino effect can also be seen on the toppling of the fiscal budget of the government as a consequent of reduced revenue generation and tax collection, all in a bid to augment businesses.
The Ghana Stock Exchange composite index which mirrors the average performance of shares of listed companies witnessed a significant drop of about 17 percent from January to early June of 2020. The composite index, however witnessed a drop of about 8 percent within the same period in 2019.
Emphatically giving reason which accounts for the decline in the stock market, Mr. Ackah further buttressed the cumbersome and tight position businesses have been put in by weighing the option of laying workers off or resorting to salary reduction.
“Let’s be clear, there are companies that are going through challenges, and some of those companies are laying off people while others are reducing salaries. People’s livelihoods are being affected in one way or the other. Some may have invested originally for long-term purposes, but have decided that they badly need the money at this time to shore up some of their expenditures. So based on that, they will be willing to offer it even if it’s a discount at the price at which they purchased it before. And based on that, that is why prices are falling. Until the Coronavirus is handled in a way, we will continue to see some dropping of prices”.Ben Ackah
Conversely, the market has also witnessed some significant activity on the trading front as more than 260 million shares valued at GHC 194 million have been traded in the first six months of 2020, a performance which represents a 107.9 percent growth in volumes, and 87.7 percent growth in value traded when compared to the same period in 2019.
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