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

Economist says 2013 budget presents hope for private sector

There is a window of hope for the private sector in the 2013 Budget Statement, says Deodat Adenutsi, an Economist with the Central University College.

The government’s fiscal policy statement presented by the Finance Minister, Seth Terkper focused on fiscal discipline to stabilize the economy, infrastructure development and growth acceleration.

Mr. Adenutsi says “there will be an immediate mixed reaction when it comes to the prospects for the private sector but in the long run I think there is a glimmer of hope for them to be excited about opportunities within the budget”, he said.

According to him, there should be a re-engineering of the private sector with government’s spending on infrastructure development in critical sectors of the economy to meet the Millennium Development Goals.

“There should be major spending allocated to critical areas within the energy sector as far as our power crisis is concerned and in the long run I expect that the private sector takes advantage of some of these critical infrastructure to invest into activities that would create jobs in the system”, Mr. Adenutsi.

Prior to the presentation of the budget, the Economist had anticipated government will not immediately be interested in reducing the country’s fiscal deficit, which currently stands at 9 percent.

Finance Minister, Seth Terkper said Ghana, as a developing country, must still borrow to expand its infrastructure but noted the government will shift its focus to the quality of loans it acquires.

He is hoping the deficit will stay between 6 and 9 percent within the year.

Story by Kofi Adu Domfeh