After returning losses to investors for the first three quarters of 2020, the Ghana Stock Exchange returned a gain of 5.2 % for equity investors in the fourth quarter, a development which should continue in 2021 and lead to the first positive return in a year for the local bourse since 2017.
That’s according to General Manager of UMB Stockbrokers Ben Ackah. This follows renewed confidence in the equities market after the development of multiple vaccines to control the spread of the Coronavirus pandemic.
For many industry watchers in 2020, the pricing and valuation of the listed stocks did not reflect the strong fundamentals of the listed companies. A key reason for the disparity was the uncertainty generated by the COVID-19 pandemic, forcing many investors throughout most of the year to turn to the fixed income market. General Manager of UMB Stockbrokers Ben Ackah in an interview with Citi Business News also blamed COVID’s impact on the business community for the performance of the GSE in 2020.
Mr. Ackah however is optimistic of the local bourse making positive gains this year.
“For 2021, I expect the GSE to return a positive index by the close of the year. Admittedly this is an optimistic forecast and is contingent on an increase in corporate earnings by the companies on the market and a low-interest rate environment.”
Breakdown
After returning about 52 % to investors in the year 2017, the performance of the GSE took a negative turn for the next three years. 2018 saw the local bourse return negative 0.5 % in terms of value for investors, while the year 2019 saw the Ghana stock exchange return negative 12.25 % for investors of listed equities, mainly due to the impact of the financial sector clean-up among other factors.
The trend continued for the first 3 quarters of 2020 with investors getting a return of negative 17.8 % on listed equities from January to September. However the last quarter of 2020 saw a reversal of fortunes as the consistent quarterly losses in the year was halted with the 4th quarter seeing the local bourse rebound by as much as 5.2 %, bring 2020’s overall return to investors to -13.98 %, the poorest in over half a decade.
