The participation of foreign investors in the equity market improved in 2023 but decreased in the debt market.

According to the 2024 Financial Stability Review, foreign investors’ debt holdings decreased to GH₵17.47 billion at the end of December 2023, compared to GH₵18.70 billion at end-December 2022.

This development was partly due to the Domestic Debt Exchange Programme which affected investor confidence, inducing sell-offs.

However, the value of foreign investors’ equity holdings increased to GH₵20.90 billion at end-December 2023, from GH₵15.43 billion at end-December 2022. This reflected the improved performance of the stock market.

Meanwhile, stock market activities appeared concentrated on few stocks making it vulnerable to swings in these equities.

The access dimension captures market concentration and is measured by the Herfindahl-Hirschman Index (HHI), the share of the largest ten firms in terms of total market capitalization and the share of the top ten firms in terms of total trading volumes.

At the end of December 2023, the index for the efficiency dimension declined to 0.18 from 0.31 in the previous year. The decline in efficiency reflects the increase in the percentage of shares with zero returns, to 40% at the end of December 2023, from 32.25% at the end of December 2022.

Stability of stock market reduced in 2023

Also, the stability dimension of the stock market reduced in 2023.

Stability is measured by the price-to-earnings ratio, price volatility index, and the percentage of stocks with negative returns.

At the end of December 2023, the index for the stability dimension decreased to 0.26 from 0.58 at the end of December 2022.

The decline in the stability index was on account of a decrease in the price-to-earnings ratio by 29.20%, complemented by an increase in the volatility indicator by 8.18%.