GSE likely to record first positive yearly return since 2017 – Analyst

A continuous easing of COVID-19 related restrictions will see the Ghana Stock Exchange (GSE) ending the year 2021 on a positive note, the first time since 2017. That’s according to the General Manager of UMB Stockbrokers, Ben Ackah.

For the past decade, the Ghana Stock Exchange Composite index (GSE-CI) which reflects the average performance of shares of all listed companies on the local bourse recorded mixed returns.

Average returns for investors in the last 3 years alone have all been negative, with 2018, 2019 and 2020 all returning -0.29%, -12.25% and -13.98% respectively. In 2017 however, the GSE-CI posted a resounding 52.73% yearly return to investors in Cedi terms.

Renewed confidence in Ghana’s equities market so far this year, following the relative success in the handling of the COVID-19 pandemic as well as a strengthening of the economy, has onlookers and analysts optimistic about the stock exchange once again returning to its bullish ways.

According to General Manager of UMB Stockbrokers, Ben Ackah, poor performance of government securities coupled with strong performance of listed companies is increasing confidence in the GSE.

“I think what has generally driven the market is the performance of some stocks on the market. MTN in particular has done almost about 80% return for the market from the beginning of the year till now, and that kind of return has driven a lot of investors to that stock and the GSE in general. Also, you will notice that the returns on Government of Ghana securities have been trending downwards. With investors looking for alternatives away from the bonds and fixed income markets, they end up looking at the equities market.”

The capitalization of the stock exchange also improved significantly in the first half of 2021 when compared to the same period last year.

It started this year valued at GHS54.4 billion and ended June valued at GHS61.3 billion, representing a growth of 12.7%.

Mr. Ackah says the trend is likely to continue if the pandemic is kept under control and if the easing of restrictions continues.

“With the continued easing of restrictions, the economy continuing to recover from where we were last year, I think there will be a lot more interest in the stock market because of the deliverables we are seeing. I expect the market to end on a positive note at the end of the year, that is where we even are right now. The market is a good place to invest your money if you know exactly what you are putting it into,” he added.

Source: Ghana Business

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