GSE loses GH¢15 billion as market growth slows

The Ghana Stock Exchange’s historic rally seems to have run out of steam. The market shed about GH¢15.5 billion in value over the past month amid profit-taking on the year’s big winners and growing caution heading into the final quarter. The GSE Composite Index (GSE-CI) closed on Friday, October 2, at 14,074.46 points, with total market capitalization of GH¢267.59 billion. A month earlier, on September 2, the market was valued at GH¢283.05 billion, with the index at 14,888.01. The benchmark is now about 11.6 per cent below its peak of about 15,919 points, reached earlier this year. On March 10, the index crossed 15,000 for the first time in its history. The pullback comes after one of the strongest runs in the Exchange’s history. The Composite Index started 2026 at about 8,770 points. Even after September’s losses, it remains about 60 per cent higher for the year, making Ghanaian equities one of the best-performing asset classes in the country. Much of that gain came early. In the first quarter alone, the composite index surged nearly 49 per cent and the Financial Stocks Index rose 65.5 per cent, as investors reacted to strong 2025 earnings from banks and insurers and improving asset quality. By March 10, the GSE-CI was up 73.15 per cent for the year, the best performance among Africa’s major stock markets at the time, ahead of Tanzania, Nigeria and the regional BRVM exchange. Since then, the market has been more volatile. After falling back to about 13,000 points by early April, the index recovered to trade between about 14,300 and 15,400 points through the middle of the year, reaching 15,438 at the end of July. At the end of August, the GSE reported a year-to-date return of 71.90 per cent for the Composite Index and 70.09 per cent for the Financial Stocks Index. September broke that pattern. The index fell on most trading days during the month, sliding below 14,100 points by mid-September, and ended the month at 14,139.23. Selling hit several of the market’s most actively traded names. Access Bank Ghana fell by the exchange’s daily limit of about 10 per cent on two consecutive days, September 9 and 10, to close at GH¢23.91. GOIL shed about 9 per cent on September 11 to GH¢7.00 and fell further to GH¢5.50 by September 30, down from GH¢7.86 in April. Societe Generale Ghana closed September at GH¢5.20, down from GH¢6.80 at the end of July, even as SSNIT and Morocco’s Attijariwafa Bank completed a deal to take over the French group’s controlling stake. SSNIT raised its holding to 24.36 per cent. IC Securities had previously rated the stock a “sell” with a fair value of GH¢4.10, arguing it was overpriced after a sharp fall in half-year profits. Speculative small-cap stocks also unwound. Dannex Ayrton Starwin, the best-performing stock in August with a gain of 313.6 per cent, fell by close to the daily limit on several days in early September. Not every stock retreated. Ecobank Transnational Incorporated swung sharply during the month, gaining 6.79 per cent on September 30 alone. GCB Bank rose more than 6 per cent on September 8, and SIC Insurance gained 7.16 per cent on Friday last week. The market’s direction now depends on several competing forces. The case for shares rests largely on falling interest rates. Yields on government securities have dropped sharply. The 364-day Treasury bill rate fell below 10 per cent at the September 18 auction, from about 13 per cent in mid-July, while the 91-day bill now pays 4.68 per cent, below the 5.0 per cent rate of inflation. With returns on short-term government paper falling, equities and longer-dated bonds become relatively more attractive to investors seeking higher returns. Corporate earnings have also been strong. MTN Ghana, the Exchange’s largest company, reported a 32.3 per cent rise in service revenue in the first half of 2026, while banks have benefited from strong balance sheets and a capital adequacy ratio that rose to 20.4 per cent in June. Banks, which make up a large share of the market, also face a regulatory deadline. The Bank of Ghana has directed banks to cut their non-performing loan ratios to no more than 10 per cent by the end of December. Those that miss the target face restrictions, including a ban on dividend and bonus share payments from January 2027. The industry’s bad loan ratio stood at about 15.7 per cent in August, according to central bank data, leaving some lenders with work to do in under three months. Trading activity has also thinned. Only about 1.03 million shares changed hands on Friday, compared with 4.75 million on September 30 and 8.11 million on September 17. Five stocks advanced on Friday, four declined and 31 were unchanged. The final quarter will test whether the rally can resume. Third-quarter earnings from listed companies, September inflation figures due from the Ghana Statistical Service this week, and the 2027 Budget, due in November, are all likely to shape investor sentiment. Investors will also watch whether falling Treasury bill rates push more money into equities, and whether the cedi stabilizes as gold-backed dollar supplies increase. From the market, the message is clear that the easy gains of the first half are over, and investors are becoming more selective about where they put their money.Source: economytimesnews.com
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