The Ghana Stock Exchange (GSE) is expected to deliver a higher return than previously forecasted, thanks to the strong performance of non-financial stocks, according to Databank.
The financial asset manager has revised its market outlook for the year, projecting a return of up to 18 percent for the GSE Composite Index (GSE-CI), which measures the weighted average price changes of all listed equities.
This is an improvement from the 12 percent growth that Databank predicted at the beginning of the year, after the GSE-CI recorded a 13 percent drop in 2022.
In its latest quarterly outlook note, titled ‘Beyond the Trough: Stocks Remain in the Spotlight as a Glimpse of Economic Normalcy Emerges’, Databank said that the demand for non-financial stocks, such as Benso Oil, MTN and TotalEnergies, would continue to drive the market growth in the second half of the year.
“These stocks offer steady earnings and returns even during economic downturns. We expect income investors to maintain a favourable posture toward reliable, high dividend-paying and defensive stocks,” Databank said.
However, Databank cautioned that the demand for banking stocks remained weak due to the negative impact of the Domestic Debt Exchange Programme (DDEP) on earnings growth and the suspension of dividends by the Bank of Ghana (BoG) until further notice.
The DDEP is a programme that involves restructuring some domestic debt instruments to reduce interest payments and extend maturities.
“It is worth noting that the announcement of the second round of DDEP has intensified investors’ concerns about the impact on financials. We anticipate industry players to implement measures that mitigate risk, protect the capital base, and improve earnings generation capacity and operational resilience,” Databank said.
Market performance
In July, the GSE-CI continued its positive momentum, surging by 168.74 points and resulting in a year-to-date return of 21.30 percent.
The GSE Financial Stock Index (GSE-FSI), which tracks the performance of listed financial stocks, also ended higher than the previous month, reducing its negative year-to-date return to 16.44 percent.
Regarding trading activities, both volume and value traded saw significant increases, rising by 669.42 percent and 24.25 percent respectively compared to the previous month.
This growth was fuelled by strong performances from listed companies in their half-year results and a bullish sentiment among investors.
The top-five price gainers for the month were Guinness Ghana (32.08 percent), Societe Generale (23.73 percent), MTN (8.33 percent), CALBank (6.67 percent), and TotalEnergies (5.43 percent).
At the close of trading last week, 179,136 shares corresponding to a market value of GH¢262,234 were traded on the Ghana Stock Exchange.
The GSE-CI saw a modest increase of 4.57 points (0.15 percent) to close at 3,127.43. This represents a 1-week gain of 6.64 percent, a 4-week gain of 10.89 percent and an overall year-to-date gain of 27.97 percent.
The GSE-FSI also recorded modest growth, increasing by 0.5 percent to reach 1,723.78 points. However, it still experienced a 1-week gain of 0.5 percent, a 4-week gain of 2.1 percent and a year-to-date loss of 16.02 percent.