GSE records 16.31% return in first half of the year

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After failing to post positive results in the last two years, the Ghana Stock Exchange continue on its track of recovering from previous losses. This is reflected in its performance in the first half of the 2017 year. At the end of trading session yesterday (30th June 2017), the GSE Composite Index inched up by 12.77 points to close at 1,964.55, representing a year-to-date gain of 16.31%. Likewise, the GSE Financial Stocks Index edged up by 11.5 points to close at 1,824.88, representing a year-to-date gain of 18.08%. Yesterday’s gains were made possible by six gainers and no losers. At the end of the trading session, Standard Chartered Bank Limited (SCB) led the gainers with 11 pesewas to close at GH¢17.04 per share. This was followed by Benso Oil Palm Plantation Limited (BOPP) and Ghana Oil Company Limited (GOIL), which gained 8 pesewas and 5 pesewas each to close at GH¢4.40 and GH¢1.87 per share respectively. Fan Milk Limited (FML) also gained 4 pesewas to close at GH¢11.82 per share while Enterprise Group Limited (EGL) and Ecobank Transnational Incorporated (ETI) both gained a pesewa each to close at GH¢2.39 and GH¢0.13 per share respectively.

In relation to the year-to-date performance of individual stocks, UTB bank lead with 133.33%, followed by BOPP (111.54%) and GOIL (70%) respectively. These are then followed by GCB (46.07%), SCB (39.98%), ETI (30%) and SOGEGH (20.97%). Others include CAL bank (16%), ALW (14.29%), SCB PREF (13.33%), TOTAL (12.12%), FML (6.1%), EGH (6.06%) and UNIL (5.76%).

Despite the overall positive results of the exchange, a few listed stocks posted negative returns in the half year. Notable of these stocks are Mechanical Lloyd Company Limited (-33.33%), HFC Bank (-26.67%) and Tullow Oil Plc (-22.10%). Other stocks with losses so far include Starwin Products Limited (-33.3%), Produce Buying Company Limited (33.3%), Ayrton Drugs Manufacturing Co. Ltd. (16.67%), PZ Cussons Ghana Limited (-9.09%), Guinness Ghana Breweries Limited (8.59%) SIC Insurance Company Limited (-8.33%), AngloGold Ashanti Depository shares (-7.69%) and Access Bank Ghana (-7.32%).

In the same period, a few stocks such as Agricultural Development Bank, Golden Web Limited, Cocoa Processing Company Ltd. and Clydestone (Ghana) Ltd. neither recorded a gain nor a loss.

Stock analysts predict buoyant performance on GSE

registrars of ghana stock exchange

Stock analysts are confident trading activities will bounce back in the second quarter following a pickup in trading activities on the local bourse. The 2017 first quarter performance indicate that the stock market gained about 10 percent growth compared to the negative 4.26 percent recorded in the same period last year.

While investors of GCB Bank gained 1 cedi 64 pesewas to record the highest gains in the first quarter of this year, investors of CAL Bank were the highest losers as their stocks dropped almost 35 percent in the first quarter of this year.

With about 46 percent increase in price, GCB Bank topped the gainers for the first quarter. It was closely followed by Benso Oil Palm Plantation and StanChart which recorded 39.42 and 26.85 percent respectively.

Also, the share prices of Ecobank Ghana, Total Petroleum and Unilever Ghana Limited increased by 14.06, 11.11 and 5.76 percent respectively. With the exception of Unilever Ghana Limited, all the gainers for this year’s first quarter ended 2016 with losses on their share prices.

Also, of the top five gainers, only Benso Oil Palm and Unilever Ghana Limited recorded some gains in the same period last year.

An Associate Equity Trader at UMB Stockbrokers, Kofi Busia Kyei, explains to Citi Business News the reasons accounting for the performances of the listed companies that gained in the first quarter of 2017.

Investors were taking positions quickly ahead of the expectations of the new regime. They were expecting interest rates and inflation to drop…GCB has been resilient over the years, it gained about 22.1 percent in profits…generally, the bank has been a very good company,” he said.

But investors of CAL Bank recorded the highest loss on their share prices. The banking stock declined as much as 34.67 percent. It was preceded by Tullow Oil and Produce Buying Company with -22.60 and -16.67 percent respectively. Also, Guinness Ghana Limited, SIC Insurance and Enterprise Group recorded losses of 7.98, 1.52 and 0.42 percent respectively.

Kofi Busia Kyei further explains reasons accounting for their poor performances:

Basically CAL Bank’s profits were down over the period, down by over one hundred percent comparing 2016 and 2015…their cash also went down by 80 percent; investors also look out for these indicators before making decisions.

Meanwhile, the share prices of the remaining stocks such as HFC Bank, Ecobank Transnational Incorporated, Goil, ADB, UT Bank, Ayrton and Access Bank, remained unchanged.

The stock analysts are highly optimistic of the second quarter of 2017. They cite the new pro-business policies by the government and recent trends in interest rates as basis for their claim.

Also, the Managing Director of the Ghana Stock Exchange, Kofi Yamoah, tells Citi Business News he is hopeful the market will pick up despite a bullish performance in 2015 and 2016.

 

Credit: citibusinessnews.com



Is there any hope for the equity market in 2017?

ghana equity market

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:

  1. 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.

  1. 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.

  1. 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.

  1. 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.