Stock market keenly awaits outcome of election

The outcome of Monday’s election will have a significant impact on the performance of the Ghana Stock Exchange (GSE) as it will determine the crucial investment decisions of investors, the Head of Research at Databank, Alex Boahen, has said.

Cumulatively, this year, investors on the GSE have lost capital to the tune of GH¢3.69 billion, with the value of the market falling from GH¢56.79 billion since the beginning of the year to GH¢53.1 billion on December 3. This is due to factors including the lingering effects of the financial sector crisis and the current global pandemic.

The year-to-date return on the GSE Composite Index also stood at -19.36 percent by the end of trading on Thursday.

“After next week, we will have a clearer picture of where the market is heading. This will give us some indication of what we are likely to see in the market in 2021,” said Mr. Boahen in an interview with Business24.

“There are investors waiting to come back to the market in order to take advantage of the current attractive market valuations; however, they are waiting to see the outcome of the 2020 general elections,” he added.

Mr. Boahen noted that currently, foreign investor holdings have dropped across most emerging markets including Ghana, largely due to the de-risking of their portfolios following the Coronavirus pandemic.

“When the upcoming election is over, the market will begin to see some level of improvement in sentiments, leading to a positive recovery in the performance.”

The rate of decline in the performance of the exchange has slowed down since the second quarter, Mr. Boahen disclosed.

“The market saw its worst performance in the second quarter when it lost over 12 percent of its value. During the first quarter, the GSE lost about 4 percent; however, this has declined consistently to about 1 percent in November.”

Currently, MTN stocks have been the main driver in terms of market activities.

“On a week-on-week basis, MTN stocks account for more than 70 percent of the values and volumes of shares traded on the market. However, this has not really reflected in the wholesome performance of the market,” the Databank research chief said.