Slower economic activity and profit taking drives down Ghana Stock Exchange index 4.69pp half year 2018

Ghana’s investment market
Ghana’s investment market

The Ghana Stock Exchange (GSE) Composite Index which measures the performance of the stock exchange fell 4.69 percentage points to 11.62 percent half year (January to June ) 2018 relative to the 16.31 percent gains recorded same period last year, Kofi Yamoah, Managing Director (MD) disclosed here on Tuesday.

This he said was mainly due to slower economic activity and cashing out by offshore investors from stocks.

Gains by the financial stocks which normally lead the performance of the Accra bourse also slowed 6.3 percentage points to 11.78 percent during the period under review compared with the 18.08 percent gains recorded same period last year.

Yamoah who was presenting the half-year performance to the media explained that the slower economic activity was mainly due to lower oil production and slower growth in agriculture.

“Securities sell-off by non-resident investors due to profit-taking and rise in US Federal rates was one of the major factors for the lower gains for the first half of this year,” Yamoah explained.

Other factors also contributing to the slower performance Yamoah added included pressure on the local cedi currency from a strong US Dollar.

The local currency depreciated by about 6.0 percent over the first half of this year compared with the 3.64 percent depreciation recorded same period last year.

“But under the circumstances the index still performed appreciably well, as its 11.62 percent gains was higher than the inflation rate of 10 percent recorded for June and also better than interest and exchange rates,” Yamoah added.

Two major challenges faced by the Accra bourse according to the MD were the low number of listed companies and low liquidity on the exchange, which is mainly attributed to the heavy participation of institutional investors in shares.

The GSE has 35 listed equities on the main market and five on the Ghana Alternative market (GAX).

However going forward Yamoah said the listing by mobile telecom giants MTN on the exchange in September as well as new regulatory strengthening should enable the market sustain and improve market efficiency. Enditem

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