The Ghana Stock Exchange (GSE) for the first two months of this year has continued to record the same bearish performance that it suffered from for much of 2018.

The two market indices, the GSE Composite Index (GSE-CI) which measures the weighted average price changes of all the equities listed on the market; and the GSE Financial Stock Index (GSE-FSI), which tracks the weighted average price changes of financial services equities have recorded continuous downward movements since the start of this year, despite optimistic forecasts by many equity analysts at the start of the year.

This has largely been attributed to the further depreciation of the cedi as well as  rising interest rates on benchmark government treasuries which have favoured fixed income investments over equities.

The GSE-CI in January and February fell by 2.66 percent and 3.62 percent respectively on year to date basis, whereas the GSE-FSI declined by 1.03 percent and 2.2 percent in January and February respectively on year to date basis.

This is a complete reversal of the market’s performance in the first two months of 2018 recorded when he composite index climbed  on year to date basis by 19.28 percent and 29.36 percent in January and February. The GSE-FSI also had recorded similarly positive performance of 22.65 percent and 34.65 percent,  respectively, year to date, for the same two months of 2018.

The  performance of the market slowed dramatically  during the fourth quarter of 2018 however where both the GSE-CI and GSE-FSI dropped in performance sharply from year to date rises of 16.33 percent and 13.71 percent respectively  to year to date declines of 0.29 percent and 6.77 percent respectively, by December.

According to some market analysts, the poor performance of the market can also be attributed to the prevailing problems in the banking sector during the period, since the performance of banking sector equities has a large influence over the performance of the entire stock market.

Events and factors such as uncertainties in the banking sector and the non-declaration of dividends by the financial stocks, except GCB Bank – because they all needed to retain their profits towards meeting the new minimum capital requirement set by the Bank of Ghana – moderated and softened risk taking especially in the second half of the year weighing on the market Indexes.

Indeed in the last quarter of 2018, the GSE-FSI had a sharp decrease in performance as that deadline approached.

However, so far this year, the rate of financial sector share price falls has been marginal due to some rise in investors’ confidence in the banking sector.

UMB Stockbrokers analysis of the GSE’s performance last year also indicates that the bullish run of the market indices moderated as early as the middle of May 2018 when, investors who entered the market at the early months of the year took advantage of the continuous appreciations in the values of their shares to cash in on their investments. This resulted in excess supply which wiped off significant gains in a number of equities and heralded the replacement of the erstwhile bull market with a bear market that has re4fused to let go since then.

GSE 2018 Primary Market Performance

A total of GHc 2 billion was raised on the Ghana Stock Exchange (GSE) in 2018 through new share issues. This is as against the 2017 financial year when no capital was raised on the local bourse.

The amount was raised through two Initial Public Offers which raised a total of GHc1.15 billion – nearly all of which resulted from the IPO done by MTN Ghana, by far the largest new share offer ever done on the GSE – and the floating of additional shares from nine other already listed companies.

The nine companies, which included Access Bank, Societe Generale, Republic Bank, and Standard Chartered Bank, raised a total amount of GHc 906 million.

The two new companies which listed on the bourse last year are MTN Ghana which listed on the main exchange after raising a record GHc 1.14 billion and Digicut which listed on the Ghana Alternative Market (GAX) after raising GHc 28 million.

During this same period, the market also witnessed 19 new corporate notes and bond listings valued at GHc 1.07 billion in 2018, compared to the 18, valued at GHc 6.38 billion in 2017.

The 2017 figure was bloated by the GHc 5.39 billion E.S.L.A proceeds.

The number of Government of Ghana notes and bond listings also rose to 58, valued at GHc 21.33 billion, against the 56 valued at GHc 17.11 billion recorded in 2017.

 Outlook for 2019

On the outlook for 2019, the GSE intends to support the BoG, Central Securities Deposits, Ministry of Finance and dealers in finalising work and implementing repurchase agreement transactions on the Ghana Fixed Income Market.

The Exchange looks forward to introduce securities lending and borrowing, as well as the deployment of mobile application for secondary trading of listed securities, and improvement on market compliance by dealers and issuers through the use of technology.