Guinness Ghana Breweries Limited continued its sterling performance in recent times as it became the best performing stock on the Ghana Stock Exchange for the second quarter of this year.

It gained 43.33%, reaching a one-year high of ¢1.29 per share.

Analysts believe GGBL's stock appreciated as the company reported solid first quarter 2021 results, thanks to the turnaround in its operational performance on an improved economic environment and increased profit margins.

MTN Ghana which the led the pack in the first quarter 2021 was second on the gainers' chart after dividend-induced price fluctuations saw the telco's stock close the second quarter of 2021 at ¢1.20 per share. It grew by 41.18% quarter-on-quarter in quarter two.

Being the third most capitalised and most liquid counter, the gain in the stock was the main driver of the market's second quarter 2021 solid performance.

Financial stocks performed well in quarter 2, 2021

The financial stocks also performed well during the quarter, aided by solid first quarter 2021 results, attractive valuations, and good dividend payouts.

Ghana's leading insurer, Enterprise Group emerged as the top gainer in the financial space, recording 25% quarter-on-quarter growth in its share price. This come on the back of impressive first quarter earnings coupled with a decent dividend payout for the 2020 financial year.

Within the quarter, the group also announced the acquisition of a leading local private health insurer - Acacia Health Insurance Limited, pending regulatory approval. This announcement further spurred interest in the counter.

GCB Bank and Societe Generale Ghana followed suit as the two banking counters went up 20% apiece within the quarter.

GCB hit a two-year high of ¢5.40 per share while Societe Generale ended the quarter at ¢0.90, marking a 14-month high for the French multinational.

CalBank (CAL; +9.38%) and Standard Chartered Bank (SCB; +2.48%) also recorded modest gains as they experienced dividend-induced demand.

As a result, the Financial Stock Index gained 25.49 points to close the quarter at 1871.44 points, reflecting a year-to-date return of 4.97% (+1.38% quarter-on-quarter).

OMCs benefited from decent dividend payouts

The Oil Marketing Companies (OMC) stocks also benefitted from the market-wide price undervaluation and decent dividends payouts.

Total Petroleum Ghana (TOTAL; +15.87%) and GOIL Company (GOIL; +2.65%) shot up after announcing dividend payout ratios of 24% and 20%, respectively for the 2020 financial year.

Other news

Unilever Ghana (UNIL; -45.05%) was the biggest loser for a second consecutive quarter. Investors continued to dump their holdings in the Fast-Moving Consumer Goods counter as it has been reporting disappointing financial results over the past two years.

Access Bank (ACCESS; -18.84%) led the laggards list in the financial sector, as it declined on thin volumes, while profit-taking activity caused Ecobank Ghana (EGH; -1.39%) to dip.

Ecobank Transnational Inc. (ETI; -28.57%) and State Insurance Company (SIC; -12.50%) also contracted due to their consistent net-offered position for most of the quarter.

Market activity remained stable with a turnover of ¢153.9 million (+0.32% quarter-on-quarter), reflecting a trading volume of 126.3 million shares (-37.13% quarter-on-quarter) for the quarter.

From a year-on-year perspective, aggregate turnover grew by 31.35% from ¢117.2 million, while volumes declined by 22.37% from ¢162.7mn.

MTN Ghana led activity for the sixth consecutive quarter, accounting for 64% of aggregate volumes and 59% of total market trading.

Overall, there were 12 gainers, in contrast to 6 laggards.

GSE outlook: bullish momentum to continue

Most analysts expect the Ghanaian stock market to continue its recovery run as the market valuation remains low after three years of consecutive declines in the GSE Composite Index.

“We expect strong corporate earnings to boost investor sentiment as the economy steadily recovers from the impact of the COVID-19 outbreak. We foresee buying interest in financial, consumer goods, oil marketing companies and telecom stocks, given they are still trading below fair value”, Databank Research pointed out.

“We foresee the strongest earnings potential in the banking sector. Ghana's ongoing post-Covid economic recovery should lead to substantial credit growth and improved banks profitability, serving as a strong catalyst for banking stocks' recovery. Again, the recent 5% levy on banks' profit could negatively impact shareholders' return (ROE)”, it added.