Ghana's Stock market bull run lifts investor confidence

The Ghana Stock Exchange (GSE) is optimistic that the market’s current bull run will shore up investor confidence as the economy continues to recover from the effects of the pandemic.

The GSE, in its March 2021 report, said the market’s 13.99 percent return in the first quarter of the year placed it among the best performing stock markets in Africa.

This year’s positive returns follow three consecutive years of losses for stock investors.

According to the report, 200.9m shares valued at GH¢153.4m were traded in the first quarter, surpassing the transactions recorded in the same period of 2020, when 99.5m shares valued at GH¢76.85m exchanged hands. This represents an increase of 101.9 percent in volume and 99.6 percent in value traded during the period.

A stockbroker with Fincap Securities, Geoffrey Maison, said the market was unsurprisingly spurred by a 32 percent price appreciation in MTN stocks.

“MTN has been one of the major winners in the COVID era as digital payments, online meetings and e-commerce became the new norm. Investors were quick to price in MTN’s stellar 2020 performance, as seen in the price appreciation,” he explained.

“Other factors contributing to the market’s performance are the general price gains observed in financial stocks, driven by the good performances of most financial institutions despite the pandemic. Except for Ecobank Transnational Incorporated (ETI) and CalBank Plc, most financial stocks recorded price gains.”

He added, “This clearly signals that investors are flocking back to the market following the cloud of uncertainty that hovered amidst the global pandemic. A similar trend is seen on the debt side of the market.”

The Ghana Fixed Income Market, which trades public and private debt securities, also continued its sterling performance since the year began, recording a new all-time high traded volume of over 26bn in March, which broke the previous record volume of 18bn recorded at the end of January 2021.

Liquidity in the first quarter remained high, with Government of Ghana bonds accounting for the largest volume traded. The total volume of government and corporate securities traded in the first quarter—60bn—was a 167.8 percent increase over the same period in 2020.

“With yields on government securities declining, I expect that we will continue to see an uptrend in the GSE Composite Index as investors seek higher returns and as pension fund managers, some of whom are over-invested in government securities, rebalance their portfolios in favour of the equity market,” Maison said.

Market experts also project that the equities market will receive a boost from the government’s policy to permanently exempt capital gains on listed securities from taxes.