By Ebenezer Chike Adjei NJOKU
Equities will remain a top asset class of choice for investors in the second half of 2024 (2H24), Manpreet Gill, the Chief Investment Officer for Africa, the Middle East, and Europe at Standard Chartered has said.
The asset class has witnessed a revival in recent times, especially in frontier markets, as investors move away from troubled debt markets.
During the presentation of the bank’s 2H24 global investment outlook, dubbed ‘Adapting to Shifting Winds’, Mr. Gill said the trend is expected to continue, even in more advanced markets.
“In the second half of the year, we expect global equities to outperform bonds and cash… Between now and December, we expect that equities will be at the top of the pile,” he said.
For instance, the stock markets in the U.S. exceeded analysts’ expectations of their performance in the first half of 2024.
The S&P 500 surged nearly 15 percent over the first six months of the year. The Dow Jones Industrial Average increased by about 4 percent during the same period, while the tech-heavy Nasdaq soared roughly 18 percent.
Analysts attributed the strong gains to enthusiasm about artificial intelligence, resilient economic growth, and expectations that interest rates would ease.
Local market
Domestically, the Ghana Stock Exchange (GSE) has reported notable increases in trading activity for the first half of 2024. Between January and June, the GSE recorded a cumulative trading volume of approximately 584.65 million shares, valued at GH¢984.51 million.
This represents a 157.68 percent increase in trading volume and a 197.41 percent rise in value compared to the corresponding period in the previous year, indicating a marked improvement in market performance and investor activity.
At the close of the second trading week in July 2024, the benchmark GSE Composite Index (GSE-CI) stood at 3,958.86 points, reflecting a one-week gain of 1.63 percent, a four-week gain of 4.91 percent, and an overall year-to-date gain of 26.47 percent.
Conversely, the GSE Financial Stocks Index (GSE-FSI) was at 2,087.74 points, recording a one-week loss of 0.97 percent, a four-week gain of 0.07 percent, and a year-to-date gain of 9.79 percent. The current market capitalisation of the GSE is GH¢87.5 billion.
Balancing act
Mr. Gill further emphasized the importance of balanced asset allocation for investors aiming to grow their wealth.
He stated that a prudent mix of growth assets, such as stocks with high potential for value appreciation, is crucial despite their typically lower dividend payouts.
Addressing market volatility, he said, “Achieving financial success goes beyond simply choosing between income or growth investments.”
Instead, he argued, it requires a strategic blend of both, customized to meet individual needs and goals.
“Income portfolios are particularly beneficial for retirees who prioritize steady cash flow,” he stated.
For those without immediate income requirements and who have a significant investment horizon, Mr. Gill recommended a balanced portfolio.
“A balanced portfolio, comprising a judicious mix of income and growth assets, is essential for substantial long-term wealth accumulation,” he stated, adding that this approach provides a reliable pathway through the unpredictable landscape of market volatility.
