Financial and Information and Communications Technology (ICT) stocks dominated trading on the Ghana Stock Exchange (GSE) in 2021 – accounting for 20 and 69.3 percent respectively of the value of shares that changed hands during the period, data from the Accra bourse has shown.
Cumulatively, both sectors were responsible for 94.15 percent of the volume of stocks traded, valued at GH¢477million.
Coming in a distant third, fourth and fifth respectively of the 11 sectors were distribution (3.23 percent), manufacturing (2.97 percent) and food and beverages (2.85 percent).
Commenting on the subject, financial market expert, David Ganesha Tetteh, stated that the phenomenon was not unusual, particularly for a frontier market.
“In any stock exchange, you’ll have the large-cap stocks typically dominating trading; so it is not surprising that on our market the biggest companies are responsible for the largest value traded. MTN, for instance, contributes almost the equivalent of eight to ten percent of our Gross Domestic Product; so we should not find it surprising that it is the most traded stock by volume or value,” he explained.
He added that the current situation is however not ideal, and said urgent steps are needed to address the situation.
“Nobody wants a market dominated by a few stocks, because the more breadth and depth we have, the better. It would be a better situation to have other large companies operating in Ghana listing on the stock exchange and those already listed floating more.
These sentiments were echoed by a senior analyst with UMB stockbrokers, Kofi Bussia Kyei, who noted that due to underrepresentation in many sectors, the market as it stands is not a strong indicator of the general economy’s wellbeing.
Mining losing its lustre?
Once the primary driver of trading activity, mining shares have fallen on hard times; in part, due to dwindling prices of the leading commodity – gold.
The analysts however stated that there are a plethora of factors affecting trade in the sector with the comparatively low number of outstanding shares, which are owned and held primarily by offshore, institutional investors.
Mr. Kyei said that in addition to mining firms addressing the aforementioned issue, the market will benefit if local brokers better understand the operations of mining firms in order to better advise their clients on investing in the stocks.
The market has endured a fairly slow start to the year, with the GSE Composite Index closing trading the final week of the month at 2,773.99 – shaving 0.55 percent off the end of December value as investors await earning results.