Pension funds seen boosting GSE activities

Financial analysts have tipped the stock market to continue its strong recovery on the back of an expected increase in activity on the pension funds market.

Benjamin Amoah-Adjei, a financial research analyst at FirstBanC Financial Services: “We have seen a very strong recovery in the stock market since December last year and we expect that to continue going forward. The main drivers of the stock market this year, will be improved performance by the listed companies in addition to lower interest rates.

As you know, in 2015 and 2016, because the interest rates were so high, there was no incentive for investors to put money into the stock market. But currently, we are seeing T-bills around 15 to 16 percent as compare to 25 percent last year.

So I think for this year the long term investments, especially the pension funds and some of the other asset managers will have more reasons to push more money into the stock market which will push prices up. That is what, we think, will support the stock market throughout 2017,” he told the B&FT on the sidelines of a pension business breakfast event, organized by FirstBanC.

The Treasury Bill rates for the 91 and 182 days begun 2016 at 22 and 23 percent respectively, but reduced to 16.7 and 17.91 percent in January.

The rates have reduced even further and currently stand at 15.6percent for a 91-day treasury bill and 17 percent for the 182-day bill.

Mr. Amoah believes that: “The main threat to the stock market is inflation. If inflation doesn’t fall as quickly as we expect it to, when that happens, interest rates will quickly rise up again and if interest rates go up back again, people will once again sell of their shares and put the money elsewhere. That is the main threat we see for the stock market this year,” Mr. Amoah-Adjei added.

The local bourse has recorded two consecutive years of poor performance. In 2015, the GSE recorded a negative 11.77 percent growth in cedi terms, which means that the changing average value of the share prices of all companies on the stock exchange was in the negative.

The situation worsened in 2016, as the all-share index presented a negative 15.33 percent growth, with market capitalisation dropping from GH¢57.116billion in 2015 to GH¢52.690billion in 2016.

Amenyo Setordzie, Managing Director of FirstBanC, said that the financial outlook of the country is positive, but added that more friendly economic policies are needed.

“The outlook is positive in spite of the risk issues that we have highlighted. We still believe that this year is going to be good. A lot is going to happen in the private sector and we will also be one of the strong players in the private sector when it comes to investment,” he said.

FirstBanC Financial Services is a SEC-licensed Investment Banking Firm. It offers creative, innovative world class financial services including fund management and advisory Services.