Financial stocks lead market revival

Most of the regularly traded financial stocks are recovering from two consecutive years of battering occasioned by a harsh macroeconomic environment which wiped billions off their worth.

The stock market is, thus, set for revival, as analysts anticipate the return of investors who leaned towards government securities over the past two to three years.

Already, the Ghana Stock Exchange’s Financial Stock Index, which tracks only financial stocks, including banks and insurance companies, has recorded a 9.03percent rise, as against 6.35percent by the GSE-Composite Index, which tracks all traded equities.

Between January 3 and 31, 2017, prices of Ecobank Transnational Incorporated (ETI), Ecobank, Societe Generale, Standard Chartered, GCB Bank, and SIC, have appreciated by 40, 6.15, 14.5, 7.4, 10.6 and 25percent.

These stocks lost considerable value in 2016 with ETI, Ecobank, Societe Generale, Standard Chartered recording losses of -62.96, -8.7, -22.5, and -25.28percent respectively.

Last year, GCB Bank, SIC, Cal Bank, UT Bank and HFC Bank also lost, -6.07, -14.29, -25, -70 and -16.67percent respectively.

HFC is the only bank that has seen negative growth of 5.3percent in January, 2017, But UT, Agricultural Development Bank (ADB), Access, Enterprise Group and Cal bank have not seen any price movements so far, this year.

Apart from the growing prices, the most traded stock in terms of volume is UT Bank, with Guinness Ghana Breweries Limited placing second, and followed closely by ETI.

The volume of financial shares traded in January, 2017, has also gone up by 46.1percent to 15million, from 10.3million in January, 2016, whilst the total volume of shares traded in January, 2017 was 19.6million.

The consistent price fall, last year, has, however, taken a toll on stocks, the total value of which stood at GH¢2.9million this January, whilst January, 2016, recorded a value of GH¢18.4million.

However, with renewed optimism from investors, falling inflation, and downward trends in the rates on Treasury Bills and bonds, the market is responding and prices of, especially financial stocks, are picking up gradually.

Derrick Mensah, Senior Investment Analyst at African Alliance Securities explains that once demand is coming up in the market the value will catch up eventually, although he is worried that “there are a lot of uncertainties in Ghana at the moment.”

He equally expressed worry over reports of alleged hidden debts which the new government says are increasing the budget deficit to double digits, and the yet to be resolved energy sector debt, which is also reaching in excess of US$2billion.

“We thought we were on the right track with the IMF but then the next thing we know there are alleged numbers we have been hiding and all these things keep investors away,” he told the B&FT. “Whilst we expect a strong recovery in 2017, things of this sort could derail that recovery.”

January, 2017, has indeed set the tone for a rise in optimism on the stock market, with total volume of traded equities seeing a rise of 63.1percent compared to January, 2016.