Overall, positive developments have been forecast for Ghana's only stock market next year. Analysts at Databank and IC Securities say the recovery trajectory of the market which began in the early part of the second quarter 2009 will continue generally into 2010. In the outlook therefore, Databank has forecast that the Ghana Stock Exchange (GSE) will return between 7.0 and 10 percent by end 2010, based on the GSE All Share Index. This outlook however compares unfavourably to the 58.2 percent return recorded by the index in 2008, but is favourable in comparison to the negative 47.9 percent forecast for the index by end of 2009. The GSE this year experienced massive declines in stock prices accompanied with slight rises. The up and downward movement of the market captured by the GSE All Share Index reached its lowest level of 5,387.96 points on July 14 - representing a year-to¬-date return of negative 48.3 percent. The upward and downward trend of the market has continued since then but the positives are forecast to outweigh the negatives as the year draws to a close. In an interview with B&FT, Economic Analyst at Databank, Sampson Akligoh, said the sluggish recovery expected in 2010 will be on the back of a more stable cedi, which has been spicing foreign investor interest in the Ghana Stock Exchange since the second half of 2009. "In the aftermath of the global financial crisis that began in September 2007, the Ghanaian market witnessed significant withdrawal of foreigners who control approximately 80 percent of funds on the market. However, they are returning on the news of improved macroeconomic environment," Sampson said. "The falling inflation and Treasury bill rates also imply that fixed income securities will become more and more unattractive to investors, and what you should expect is for these funds to turn attention to the capital market," he added. He said the stock market will also do well because of the expected increased economic activity in 2010 compared to this year, and falling inflation and the implications of the New Pension Act which is expected to increase fund¬ manager investments on the market. Pointing out that the negative performance of the market this year was more because of market correction reasons rather than the impact of the global financial crisis, Sampson said the market next year will be downplayed by more cautious investors, owing to the sharp declines in returns this year. Executive Director of IC Securities Kwabena Osei Boateng however differed with regard to the behaviour of investors. For him the market rise next year will be driven by increased investor activity, shifting away from the convention of the Ghana stock market" where financial performance of companies tended to move the market. He hinted at three new stocks that will list •on the market should all things go well. The other source of excitement for the market, he noted, will be coming through the insurance stocks - given that oil production begins on schedule. "Expect the capital base of the insurance industry to be shored-up from its current GH¢200 million to GH¢300 million by new insurance operations next year," he hinted. "We also expect to feel the positive impact of foreign direct investments in the oil sector on the stock market next year. Expect consumer product stocks like Unilever and PZ Cussons to pick up more rapidly next year," he added. Like Sampson, Mr. Boateng concurred that banking stocks will sustain their appeal to investors, noting that the rise of the market will be undermined by the fact that it is driven by few sectors. Fan Milk was the only stock that recorded a positive return this year, reaching 11.1 percent at the close of trading last Thursday. All other stocks, including banking stocks which are most appealing to investors, recorded negative year-to-date returns. As of the end of trading last Thursday, Cal recorded a year-to-date return of negative 66.7, ETI negative 71.1 percent, GCB negative 36.4 percent, Stanchart negative 21.1, SG-SSB negative 33.3 percent, and Ecobank Ghana negative 1 9.4 percent. Source: B&FT