Following months of sluggish performance of Ghana’s stock market, activities on the market have begun to show some signs of a rebound, although at a slower pace than the most recent speed of its fall..
The market began an upward bullish rally, starting on Thursday, May 09, 2019 at which time it was recording a year to date change of -8.67 and – 8.56 percentage points for the composite index (GSE – CI) and financial stock index (GSE-FI), respectively.
By the close of trading on Thursday, May 16, 2017, the index had appreciated significantly, recording -6.10 and -4.88 percentage points year to date for the composite index (GSE – CI) and financial stock index (GSE-FI), respectively.
This partial rebound follows a nose-dive by the market which reached its lowest point for both composite index (GSE – CI) and financial stock index (GSE-FI) at -10.89 percent and -10.19, year to date on May 08, 2019.
The two market indices are 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.
Advising the investing public on the performance of the market in an interview with Goldstreet Business, a Stock Market Analyst with UMB Stock-Brokers, Kofi Busia Kyei explained that, as stock prices have dropped for some time now, this is the best time for investors to buy into the market, in order to make capital gains by the time the stocks prices get back to their normal levels.
“Some financials have been reported by some listed companies, which depicts good performance of these companies. For the first time in long time, we are seeing dividend payment,” Kyei said.
Despite the sluggish performance of the market during the past months, a few stocks such as Access Bank, Cal Bank, Clydestone (Ghana), GCB Bank, Ecobank Transnational Inc., Enterprise Group Ltd., PZ Cussons Ghana Ltd., Starwin Products Ltd., and Trust Bank Ltd. (The Gambia), on the market have shown some level of resilience, as they consistently have recorded price earnings ratios (P/E ratio) of below five which translates into dividend yields of over 20 percent, which is competitive against current yields on fixed income securities such as government and corporate medium term bonds.
Market analysts however have indicated that equity investors require a risk premium of at least five percent to move funds from riskless government securities to risk-laden equities, which very few stocks have achieved as yet..
By Joshua W. Amlanu