Stock market inch up amidst elections’ uneasy calm

Macroeconomic concerns weigh down GSE in January

… as investors confident over nation’s political stability

Despite the uncertainty which characterised the keenly contested general elections and the uneasy calm trailing its aftermath, the Ghana Stock Exchange (GSE) has not reacted adversely but has, as a matter of fact, recorded some marginal gains, the B&FT can confirm.

On Tuesday, the first trading session of the week, the stock market recorded gains with the Ghana Stock Exchange Composite Index (GSE-CI), which measures the movement of all listed equities, appreciating by 1.54% day-on-day (d/d), consequently reducing its Year-to-Date (YTD) loss to 18.11%.

The Databank DSI-20 Index, which is a measure of the 20 most liquid socks on the GSE, also gained 1.21% d/d, climbing up to 80.13 points. Furthermore, a total of 2.8 million shares were traded across six counters representing a gross turnover of GH¢2.6 million. There were three price movers, all gainers, observed in the session with EGH emerging as the top gainer for the day followed by TOTAL and MTNGH.

On the second day of trading, the market exhibited measured buoyancy, as there were block trades in Guinness Ghana Breweries Ltd. (GGBL) of 2.3 million shares, valued at GH¢2.04 million, accounting for approximately 93% of the day’s trade volumes. The bourse’s primary Index, the GSE-CI as well as share prices across the board remained unchanged d/d.

Speaking on the development to the B&FT, Head of Research at Databank, Alex Boahen stated that there was nothing amiss about the reaction of the market to the current political climate.

According to him, the stability witnessed on the market over the course of the final quarter of the year, coupled with Ghana’s enviable track record of holding comparatively free and fair elections must be taken into consideration and he expressed anticipation that a smooth outcome of the polls will reinforce investor confidence.

This, he noted, will then be reflected on the volume, value and prices of stocks traded on the market and set the tone for a positive outlook for the coming year.

“We must remember that this year has been affected largely by the coronavirus, which saw investors, particularly foreign investors exist the market and fly to ‘safety’. This wasn’t peculiar to Ghana, though, but was a feature of many emerging markets in Africa and Asia.

The general notion is that Ghana will have a smooth election without any significant disruption to economic activities; this has ensured that the market participants have not reacted frantically, one way or another and we expect that post-election optimism will push market activity positively,” he said.

He also called for circumspection when speaking about the efficiency of the local market with respect to the degree to which available information is reflected in stock valuation. He argued that it is a feature of a still developing market and agrees with operators of the bourse that the low Price-to-Earning (P/E) and Price-to-Book (P/B) ratios of many stocks will make the market very appealing to investors.

Also speaking to the paper, Investment Analyst at Nimed Capital, Joshua Adagbe echoed sentiments expressed by Mr. Boahen, as he noted that barring any significant unrests he expects a stable market for the rest of the year. He however predicted a marginal surge in market activity at the close of the year as Fund Managers rush to meet their Equity quotas for the year.

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