By Joshua Worlasi AMLANU
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Ghana’s stock market is riding a major wave, fueled by strong corporate earnings, falling treasury yields, and abundant liquidity.
The Ghana Stock Exchange (GSE) Composite Index has smashed through the 6,000-point mark for the first time, delivering an impressive year-to-date return of nearly 23 percent, as of Wednesday, March 5.
Major corporates like MTN Ghana and financial stocks such as GCB Bank are delivering robust earnings, reinforcing the bullish sentiment sweeping the market.
The surge in equities comes as investors flee declining treasury yields. The government, determined to lower its borrowing costs, has been aggressively pushing rates down. The Treasury auction, on Friday, February 28, 2025, saw the 91-day treasury bill plummet by 369 basis points to 20.79 percent, while the 364-day bill plunged by 460 basis points to 22.70 percent. For years, government securities provided a safe haven for investors, but with real returns shrinking, capital is being forced into riskier assets—including stocks.
Equities’ Moment in the Spotlight
The liquidity that once flowed into government debt is now finding its way into stocks, and the effect has been remarkable. Some of the country’s most prominent companies are seeing their stock prices soar, led by MTN Ghana, financial institutions, and long-dormant stocks that are suddenly making gains after years of stagnation.
MTN Ghana, the largest listed company on the exchange, has seen its stock price surge to a record high of GH¢3.00 per share, up from GH¢2.91 just a week ago. This rally comes on the heels of a strong earnings report in which the telecom giant posted a 34.5 percent increase in service revenue, driven by a 53.8 percent surge in data services. The company attributes its growth to rising smartphone adoption, higher data consumption, and the continued expansion of mobile money (MoMo) services, which have transformed the way financial transactions are conducted in the country.
The financial sector is also experiencing a resurgence. GCB Bank PLC, one of Ghana’s largest financial institutions, reported record-breaking financial results for 2024, posting a profit before tax of GH¢1.91 billion—an impressive 25.3 percent year-on-year increase. The bank’s revenue climbed by 19 percent, fueled by a strong rise in non-interest income and trading revenue.
Other financial stocks, including CalBank and Standard Chartered, have also posted gains, reflecting renewed investor confidence in the sector. Even companies that had long been written off by market watchers are making a comeback. Clydestone PLC, a stock that hadn’t moved in a decade, has surged 33 percent year-to-date. Benso Oil Palm Plantation (BOPP) and Unilever Ghana have also posted gains, highlighting the broad-based nature of the rally.
But is this rally built on solid fundamentals, or is it merely a liquidity-fueled boom that could fade just as quickly as it began?
A Market Driven by Policy—Not Fundamentals?
While strong corporate earnings have played a role in boosting investor sentiment, much of the current market momentum can be traced to government intervention in the debt market. The government has taken an increasingly aggressive approach to treasury auctions, with investors reporting that bids containing specific yield requests are being rejected outright. This forces participants to accept whatever rate the government sets or look elsewhere—many are choosing equities.
Dela Agbo, CEO of EcoCapital Investment, notes that previous week’s auction saw many investors submit bids without specifying interest rates, allowing the government to dictate pricing.
“The few investors who understand alternative assets are now shifting into the equity market,” Mr. Agbo explains. “Last two week’s auction saw rates drop by almost 2%—a significant decline. Even within our firm, we experienced it firsthand. Our fund manager submitted a bid with a stated rate the previous week and was rejected. This time, we submitted without a rate and got an allocation at a lower yield.”
For the government, this strategy is a win. Lower rates mean reduced borrowing costs and a more manageable debt burden. President Mahama even highlighted the declining interest rates as a major economic achievement in his recent State of the Nation Address.
But what is good for the government is not necessarily good for investors.
With inflation hovering around the same levels as treasury yields, investors are effectively lending money to the government at zero real returns. Many institutional and retail investors who previously relied on government securities for steady income are now being forced into riskier assets. While equities have been the primary beneficiary so far, the question remains: How long can this last?
The Foreign Investor Factor
A key test for the sustainability of Ghana’s stock market rally will be the return of foreign investment. In 2024, the Ghana Stock Exchange was the best-performing market in Africa, posting a remarkable 56 percent gain. The exchange’s composite index rose from 3,130.23 to 4,888.53, marking its strongest annual performance since 2013’s 78.8 percent surge. This kind of performance does not go unnoticed, and foreign investors are starting to take interest.
Foreign participation in Ghana’s equity market has historically been inconsistent, largely due to concerns about currency risk and macroeconomic instability. However, the recent strength of the cedi and the positive earnings reports from listed firms could attract international funds looking for high-growth opportunities. If foreign capital flows into the GSE in a meaningful way, it could extend the current rally beyond what domestic liquidity alone can sustain.
How Long Can the Rally Last?
Markets driven by liquidity can be explosive, but they can also be short-lived. The current rally isn’t necessarily built on improving business fundamentals—it’s being fueled by a lack of alternatives. If treasury rates continue to fall, equities could see their best year in history. But if inflationary pressures resurface, forcing the government to raise rates, the flow of capital into stocks could reverse just as quickly.
Another potential risk is the broader economic environment. While the government has managed to keep interest rates under control for now, external shocks—such as rising global commodity prices or capital flight from emerging markets—could put pressure on Ghana’s monetary policy. A reversal in the downward trend of treasury yields would likely trigger a shift back into fixed-income assets, taking some of the steam out of the equity rally.
For now, investors are enjoying the ride. The Ghana Stock Exchange is delivering some of the best returns in recent years, and the momentum shows no signs of slowing. But history has shown that liquidity-driven rallies can be fragile. Whether Ghana’s bull market has true staying power—or is merely a temporary reaction to artificially low interest rates—is a question that will define the rest of 2025.
