After recording negative returns from 2018 to 2020, the Ghana Stock Exchange has taken a strong positive turn, returning about 36% in Cedi terms for investors in the first half of 2021.
During the same period last year, the stock exchange returned about -16% to investors.
The strong performance can be attributed mainly to a renewed confidence in the equities market after the development and subsequent deployment of multiple vaccines to control the spread of the Coronavirus pandemic.
The Ghana Stock Exchange Composite index (GSE-CI) which reflects the average performance of shares of all listed companies on the local bourse has recorded mixed returns, in the past decade.
Recorded returns for investors in the last 3 years, however, have all been negative.
According to data from the local bourse, returns in 2018, 2019 and 2020 were -0.29 %, -12.25 % and -13.98 % respectively.
Renewed confidence in Ghana’s equities market by businesses and local investors, however, has seen the stock exchange returning taking a bullish turn in the first 6 months of 2021.
In an interview with Citi Business News on the impressive performance, the General Manager of UMB Stockbrokers Ben Ackah highlighted the factors that have contributed to the recovery.
“I think what has generally driven the market is the performance of some stocks on the market. Generally, the market has performed well, but if you look at the stocks of Enterprise Group, GCB, SG-SSB, MTN, they have all done quite well. But MTN, in particular, has done almost about 80% return for the market from the beginning of the year till now, and that kind of return has driven a lot of investors to that stock and the GSE in general.”
“Compared with last year, we have so far done 25% more in terms of volumes traded on the market. In terms of values of transactions traded, we have done almost 60%. When you look at all of these things, there is a certain confidence that has come in respect of the market. Also, you will notice that the returns on government of Ghana securities have been trending downwards and investors are now open to alternatives like the equities market,” he added.
Improved capitalization
The capitalization of the stock exchange also improved significantly in the first half of 2021 when compared to the same period last year. It started this year valued at GHC 54.4 billion and ended June valued at GHC 61.3 billion, representing a growth of 12.7%.
Some of the biggest gainers over the period under review were MTN, Guinness Ghana Breweries Limited and GCB Bank with their stocks appreciating by about 88 percent, 43 percent and 33 percent respectively.
MTN started the year trading at GHP 0.64 but ended June trading at GHC1.20, GGBL began at GHP0.9 and ended June trading at GHC1.29. GCB on the other hand started 2020 trading at GHC4.05 and ended June trading at GHC5.40.
