This year’s performance of the Ghana Stock Exchange is one investors will want to quickly put behind them.
The bourse has seen a topsy-turvy performance all throughout the year and it is set to end the year with its composite index, which measures the performance of stocks of listed companies, recording a negative 12.3 percent as of December 27, 2019.
With the GSE composite index recording a -0.29 percent growth last year, barring any miracle, this year’s performance will be the market’s worst performance over the past three years.
According to Gideon Amoani-Kyei, an equity research analyst of Databank Financial Services, the sluggish market performance is due to weak investor sentiments fueled by the financial sector reforms.
He explained to Citi Business News that the foreign investors on the bourse did not show enough faith in the reforms that were undertaken by financial sector regulators hence their laid back approach which translated into a bearish stock performance.
The financial stock index which measures the performance of all financial institutions listed on the stock market recorded a successive negative performance. Last year, the return on the financial stock index was -6.79 percent while the 2019 YTD figure has seen a marginal improvement to -6.62 percent.
The country’s financial sector has seen a number of regulatory reforms which have led to the collapse of several banks as well as other non-bank financial institutions.
As Ghana heads into the 2020 elections, there are fears that the Ghana Stock Exchange performance may deteriorate further. In 2015, the market’s performance gave investors a return of -11.77 percent and the subsequent election year further provided a grimmer performance of -15.33 percent.
Mr. Amoaning-Kyei explained that investors are typically skeptical of macroeconomic management in election year fearing that caution will be thrown to the wind which will lead to the reversal of gains made and subsequently affect the cedi’s performance.
The poor performance of the cedi has the potential of eroding whatever gains investors would have made on the market which justifies their skepticism.