Our first post on the ‘Get to know your mutual funds’ series started with Epack investment fund, where we highlighted aspects such as the nature, investment strategy and performance of the fund. To continue the series, let’s have a look at SAS Fortune fund. Continue reading “Get to know your mutual funds: SAS Fortune fund”
As the 2016 year brings down the curtain, many are those yearning for a turning point in the Ghanaian equity market. The Ghana Stock Exchange, which plays a leading role in the Ghanaian equity market, is projected to close the year 2016 with a negative return. The Exchange similarly posted -11.77% in 2015, compounding investors’ disappointment.
No matter these negative yields, the equity market has been known for its ability to recover from negative trends to positive results in the past years. This could, at least, give some hope to the investing public. So the questions we ask are:
“Must investors anticipate better results in the coming year?”
“Should we embrace ourselves for a positive outcome in the equity market for the year 2017?”
Answers to the above questions may depend on some signals. A few signals depicting the probability of a positive yield in 2017 are:
- Continuous drop in Treasury bill interest rates
Interest rates of Treasury bill have dropped to their lowest for the year 2016, thus reducing the attractiveness of the fixed income market. As mentioned in a previous post, investors normally shy away from Treasury bill to other investment options anytime Treasury bill rates become unattractive. Since the equity market serves as one of the reliable investment alternatives to Treasury bill, the drop in Treasury bill rates may be a positive signal for the equity market.
- Negative yield (return) for two (2) consecutive years
The history of the Ghana Stock Exchange shows that the bourse barely posts a negative return for more than two consecutive years. In fact, the only period the stock market repeatedly recorded negative returns for three consecutive years was between 1990 and 1992 (Note: the Ghana Stock Exchange officially began in 1990. Click here for GSE returns since inception). Since then, there hasn’t been any period with a repeated negative return except 2015/2016. Thus, the probability of the stock market posting negative return for a third consecutive time in 2017 is less, even though possible.
- Change in government
Ghana will soon be transitioning from the current government to a new one following the recent election held on 7th December, 2016. A change in government, although arguable, may also reflect on the market through many factors. Some investors and market players perceive various economic indicators to improve following the in-coming government. Such investors mainly respond to media sensations to take investment decisions. This may in turn reflect positively on equity market activities.
- Dividends postings by listed firms
Many organisations listed on the Ghana Stock Exchange are expected to publish their dividend pay-outs at the end of the year. If these figures are good, they may drive investors to demand for more stocks on the market. As we know, higher demand may trigger positive returns.
To sum up, 2017 may be a welcoming year for the equity market due to a few signals. First, the continuous drop in Treasury bill rates may lead more investors to the equity market as an alternate option. Second, based on historical data, there is a less probability that the stock market would post a negative return for the third consecutive year. Third, the response of investors to media sensations owing to a change in government could reflect positively on equity market activities. Finally, the publication of profits and dividends by listed companies may trigger more stock demand which may result in positive return on the market.