Optimistic outlook for Ghana’s equity market

Financial market analysts say the outlook for the equities market remains optimistic for the final four months of 2013.

They anticipate the successful adjudication of Ghana’s electoral dispute to restore business and consumer confidence and to speed up recovery of the larger economy.

A ‘Weekly Financial Markets Review’ released by the New Generation Investment Services (NGIS) in Kumasi states that the domestic currency is expected to remain relatively stable on the back of the respite provided by proceeds from the recent 10 year Eurobond and the 7 year bond.

“We expect the broader market indicator to rise further with the impressive financial results listed companies continue to post despite the challenging business climate. Occasional price declines in overpriced stocks are nonetheless expected”, said the Review.

Ghana's growth had slowed in the first two quarters of the year and deep into the third quarter, with second quarter growth rate projected at 6.7% against government’s target of 8% for the year.

The research team at NGIS however foresees this changing in the final quarter. 

Investment and Equity Research officer, Charles Amoah, tells Luv Biz Report an interplay of factors will make the larger economy better off than it has done in the first eight months of the year.

“Consumer and business confidence has been restored after successful adjudication of electoral dispute. Individuals and businesses had hitherto adopted a wait-to-see attitude, slowing consumption, productivity, taxation, hiring, among others”, he observed.

He added that falling food prices on harvest of local staples, reduced pressure on domestic currency with inflows from bond issue will keep inflation falling for the period.

Mr. Amoah also observed the end to load shedding will bring down power cost to industry whilst government’s decision to restructure its debt with long-term borrowing and further decline in cost of interest rate will free credit for private sector.

“In this final quarter of the year, what is going to drive the market will be that companies are now going to perform better with the fundamentals improving and when they turn in enhanced financials, this will motivate investors to put in a lot of funds to drive prices of stock”, he said.

According to him, individual investors who invest long term stand to benefit from the market.

Story by Kofi Adu Domfeh