The Ghana Stock Exchange could realise some gains in the last quarter of this year, following some steady moments in the last two months of the third quarter.
The GSE returned negative 20.19% in dollar term for investors in the first nine months of this year but the market lost only about 2.3% in Quarter Three.
Speaking to Joy Business, Alex Boahen, the Head of Research at Databank Research expressed optimism saying that the market in quarter four (Q4) of this year is most likely to portray some level of calmness.
“We saw some level of calmness in the market in quarter three where the market lost just about 2.3% which was lower than the losses that were recorded in Quarter One and in Quarter Two. For example, in Q1, the market lost 4.3%. In Q2 when the coronavirus actually reached its peak, the market peaked at 12%”.
“If you look at the performance of the market during Q3, I think that gives us some hope that things are actually improving and going forward we’re going to see this level of calmness in the market in Q4,” he said.
Meanwhile, he indicated that foreign investors have shown resilience more than domestic investors, hence they are likely to sell more in the coming election season.
“If you look at the political environment [Ghana], yes the political risk is there, especially from foreign investor perspective, but if you look at it from domestic investor perspective, we think domestic investments are very conversant with our political environment.”
“This is because, what we see is that foreign investors actually tend to sell more whenever the election tension rises in the country,” he explained.
Q3 performance of the market
Stock market investors lost about GHS3.5 billion in the third quarter of this year.
As of the end of September, the market capitalization which measures the total market value of stocks stood at GHS53 billion.
As many as 17 out of the 37 listed companies have lost value in their share prices, whilst only five have gained value since January 1st. This is the third year running in which the market has been underperforming.
The weak performance of the market has been largely attributed to the collapse of some financial institutions which has deprived many investors the needed funds to invest on the capital market.
For instance pension funds and other investment funds that invest heavily on the market had slowed down because their funds were or have been locked up. The Menzgold saga in which some investors also have their funds locked-up in the company is also a typical example.
Financial stocks which hitehrto were doing well have been performing below expectations this year, with nine banking stocks losing market value. ADB is the only banking stock that has witnessed an unchanged price since the beginning of the year.
The best performing stock at the end of the first nine months of this year was Cocoa Processing Company which has registered a 50 percent increase in its share price. It is selling at 3 pesewas per share.
Irrespective of the performance of the equity market, the bond market has witnessed some encouraging results.
GSE still ranked 10th
Meanwhile, the Ghana Stock Exchange is still ranked 10th among 15 top stock exchanges on the African continent. It is doing better than the Kenyan Stock Exchange, Mauritius SEMDEX, and the Johannesburg Stock Exchange.