- as investors continue to scale back, retreat to primary fixed income market
Almost half of the 38 active listings on the Ghana Stock Exchange (GSE) have recorded no price movement between the turn of the year and the end of August, an analysis by the B&FT has shown.
In all, 16 stocks have remained flat over the period under consideration, with nine gainers and 12 laggards, reflecting prevailing investor sentiments.
A further perusal of the available data shows the stationary fairly evenly distributed among the 11 sectors captured by the local bourse, with 12 from the main board and four from the six stocks listed on the Ghana Alternative Market (GAX).
The stagnant stocks include AngloGold Ashanti Depositary Shares (AADS), Agricultural Development Bank (ADB), AngloGold Ashanti Limited (AGA), Aluworks Limited (ALW), Clydestone Ghana Limited (CLYD), Cocoa Processing Company Limited (CPC) and Dannex Ayrton Starwin Plc. (DASPHARMA).
Others are Mega African Capital Limited (MAC), Republic Bank Ghana Limited (RBGH), the ordinary and preference shares of Standard Chartered Bank Limited (SCB) and (SCB Pref), as well as Hords Limited (HORDS), Meridian-Marshall Holdings (MMH), Samba Foods (SAMBA) and Digicut (DIGICUT).
The shares of mining firm Asante Gold Corporation (ASG) were listed on June 29, 2022, at GH¢8.87 and recorded no price change at the end of August. Also, the shares of domestic publishing company – Sam Woode Limited (SWL) – remain suspended from trading on the Exchange) since the close of trading on Friday, September 18, 2020, amid an intended restructuring of its operations.
Offering commentary on the observation, the Head of Research at Databank, Alex Boahen, said the development is not surprising as it reflects long-standing liquidity struggles of the market.
This, he said, has been worsened by wider macroeconomic apprehensions, the lukewarm performance of some stocks as reflected in their interim results, and historical apathy toward other stocks.
“What we are witnessing does not come as a surprise at all. We have just under 40 stocks, yet the market appears to have always been skewed to some stocks and away from others, such that even when those in the latter category perform well, there is little traction.
“But much more importantly, due to on-going macroeconomic challenges and fears that they will not ease immediately, investors continue to move their investments toward fixed income, and this is only worsening the situation,” he explained.
The development continues the narrative of the GSE-listed stocks being grossly undervalued when their price-to-earning (P/E) ratios are taken into consideration.
While many investors would refer to 20 to 25 as the conventionally ideal P/E ratio range, with the lower figure being preferred as it points to the earning potential of the stock, less than five of the GSE-listed had a P/E ratio exceeding this band at the end of the period in question, with almost all the stocks trading at a P/E ratio less than 10.
Gainers, losers and market mover
The year-to-end-August price-appreciation pack was led by SIC Insurance (SIC), which was up 287.5 percent, the NewGold Exchange Trade Fund (GLD) at 56.54 percent, Trust Bank Gambia Limited (TBL) with 41.18 percent and Guinness Ghana Breweries Limited (GGBL) at 25 percent.
At the other end of the spectrum, Produce Buying Company (PBC), Fan Milk (FML) and GCB Bank (GCB) had lost 33.3 percent, 25 percent and 22.71 percent, respectively.
Telco, MTN, which has a market capitalisation of GH¢11.2billion – or, 17.4 percent of the GSE’s market cap – had shrunk by 18.02 percent, from GH¢1.11 to GH¢0.91 per share.
The stock, which was responsible for 95.9 percent and 90 percent of the volume and value of shares traded between January and August, has seen its 30 percent localisation policy further drive liquidity off the market, as shares have been offered over-the-counter.
Overall, the volume of shares traded from January to August stood at 1,232, 653,349 valued at GH¢1,237,259,893.31, representing an increase of 232.98 percent and 235.56 percent over the same period last year.
