Portfolio Manager at EcoCapital Investment Management Limited, Elliot Amponsah
Elliot Amponsah, Portfolio Manager at EcoCapital Investment Management Limited, has encouraged investors to diversify their stock market assets to avoid risks amid renewed investor activity in the equities market.
According to him, equities carry a higher amount of risk than other asset classes, thus investors should buy shares from many companies listed on the Ghana Stock Exchange (GSE) rather than placing all of their proverbial eggs in one basket.
He stressed the necessity of diversification, especially given current investor concerns about the risk profile of the country's investment possibilities.
"When investing in the stock market, don't put all of your eggs in one basket."
Rather than investing in a single stock, distribute your money among at least eight different stocks on the market. "With this, if one drops to the point where you are losing money, the other ones will cushion you in your portfolio," he remarked during a Zoom conference to educate his audience on the structure, operation, and prospects in the stock market.
Currently, the GSE is the country's only stock market, allowing enterprises and governments to raise long-term financing. The Portfolio Manager of EcoCapital highlighted that the stock exchange is open to everyone, but he recommended elderly people and other risk-averse investors invest only a portion of their money in buying shares due to their limited ability to handle risk.
He also emphasized the importance of regularly watching the market on a daily basis in order to understand the performance of each listed firm, particularly those in which the investor has shared.
"If you want to invest in the stock market, you have to be vigilant by watching what happens on the stock market," he explained. He suggested consumers who do not have time to follow the market consider hiring investing firms to do so on their behalf.
Mr. Amponsah also discussed some of the elements that influence stock prices, such as company performance, news events, and economic conditions such as interest rates, inflation, and GDP growth.
He stated that there are two key methods to profit in the stock market: capital gain - buying low and selling high - and dividends provided to investors by market businesses.
According to the investment manager, while the stock market can be a complex and daunting place, understanding the fundamentals is critical for making informed investing decisions.
His remarks come amid a revival in the stock market as investors seek alternatives to the flat debt market.
The GSE Composite Index (GSE-CI) rose 14.01 percent in March versus the previous month, for a year-to-date rise of 12.33 percent. Investors diversifying their holdings and dividend announcements from some publicly traded firms spurred the rise in share prices.
Volumes and values traded increased dramatically from the previous month, by 2,730 percent and 588 percent, respectively, owing mostly to block trades in MTN Ghana shares. Total, MTN, Unilever, Benso Oil, and Guinness Ghana Brewery Limited were the top five gainers for the month.
In contrast, the GSE Financial Stock Index has lost 11.98 percent year to date, as investors forecast lower profitability for financial businesses in 2022.
The volume and value exchanged were 173,658,609 and GH167.9 million, respectively, down 19.22% and 29.17% from the same period in 2022. The total volume of 181,344,788 valued at GH199 million reflects a 35.39 percent and 34.06 percent reduction from the same time the previous year.
