Business

Investor appetite for stock market appears to be rebounding

Investor appetite for the stock market appears to be rebounding following a successful Presidential and Parliamentary elections last week.

However, analysts want to be cautiously optimistic going forward in terms of consistent positive performance.

The equity market recorded impressive activity on the day President Akufo-Addo was re-elected as President of Republic of Ghana and has since witnessed some gains. The Ghana Stock Exchange Composite Index has subsequently recorded gains though the market has still recorded negative return for investors because of the turbulent times experienced during the early months of the year.

Head of Research at Databank, Alex Boahen, told Joy Business “the story so far this year has been that typically you will see a lot more people buying shares on the market [GSE] but you don’t see that actually reflecting in the share prices. But last week the story was a little bit different where we saw significant jump in market turnover and at the same time we saw a sizeable increase in the composite index at the end of the week.”

“I mean following the declaration of the election results by the Electoral Commissioner [Jean Mensah], market turnover for the week was around 60.5 million shares which was a significant increase when we compare with the previous week because with the previous week the turnover was around 23 million shares.

“So I think this is a good news for the market and it tells you that investor appetite for the stock market or investor’s appetite for sock is actually rising which is in itself very good or very positive for the market. Has the much anticipated rebound of the Ghana stock exchange started? I think it’s too early because we have to see a consistent rise at least for the rest of the year to be able to make any meaning out of it”, he emphasised.

“But it’s an encouraging sign that if this is actually maintained for the next couple of weeks, it could indicate that there is something good in the horizon on the market for investors going into 2021”, he further said.

GSE November 2020 Performance

According to November 2020 performance of the market, the Accra Bourse recorded its record monthly trading volume of over GH¢115 million shares and value of a little over GH¢101 million.

This comes despite the GSE Composite Index registering a -19% return for investors.

“Investors’ appetite for equities is fuelled by the cheap valuations on the market – about half of the issuers (16 issuers) are trading at price/earnings multiples (PE’s) of five or below, and 20 issuers are trading at single digit PE’s”, the GSE said in a circular.

MTN Ghana dominated trading activities with volume and value traded, making up 88.5% and 61.44% respectively.

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