Stock market to bounce back after bearish 2016 performance

The Ghana Stock Exchange is projected to perform well this year despite a poor performance last year.

The Ghana Stock market ended 2015 with a negative growth with managers of the market further predicting the same situation for 2016.

Despite the challenges some stocks brazed the odds and performed well last year.

A study of the performances showed that only 2 of the 28 stocks performed creditably well in the year under review.

The rest recorded significant declines.

The two top gainers were manufacturing companies; FanMilk and Unilever Ghana Limited.

FanMilk gained as much as 3 cedis 79 pesewas while Unilever Ghana gained a pesewa to end the year at 8 cedis 51 pesewas.

An Associate, Equity Trading at UMB Stockbrokers, Kofi Kyei explained to Citi Business News strong performances and investor confidence accounted for the strong performances of the two equities.

“For FanMilk, the company actually posted very good results; for instance its earnings per share grew by about 29 percent. Unilever on the other hand posted a loss especially in the third quarter of 2016 but past performances of the company also played a key role. For instance though they didn’t pay any dividends in 2015, the payment of 40 pesewas dividends in 2016 expectations from investors on their future performances also culminated in its performance,” he stated.

Meanwhile two new entrants on the market in the last quarter of 2016, ADB and Access Bank also recorded strong growth performances.

The banking stocks gained 1 cedi 18 pesewas and 10 pesewas respectively.

Decliners in 2016

On the contrary, the three worst performing stocks for 2016 were UT Bank, Ecobank Transnational Incorporated (ETI) and Total Petroleum.

Their share prices declined by as much as 70 percent, 62.96 and 61.18 percent respectively.

Mr. Kyei also indicated that UT Bank’s inability to publish financial reports plus the poor performances affected the three stocks.

“Since 2014, the bank has failed to publish its annual report as a result there was excess supply, that is a lot of investors who wanted to sell their shares since they didn’t know what the company was about. For Total, there was a marginal drop in its performance looking at their profit after tax and even their earnings per share which dropped by about 8 percent.”

Other banking stocks that declined in 2016 include; GCB Bank (-6.07%); Ecobank Ghana (-8.7%); HFC Bank (-16.67%); Societe Generale (-22.5%); Cal Bank (-25%) and StanChart (25.28%).

The other decliners on the market included; Tullow oil (-4%), SIC Insurance (14.29%); Guinness Ghana (-18.09%); Starwin (-25%); Ayrton Drug (-33.3%); PZ Cussons (-35.29%); Benso Oil Palm (-16.80%).

2017 outlook for stock market

Meanwhile stock analysts are highly optimistic of the performance of the stock in 2017.

According to them, the debt restructuring and the resultant effect in reducing interest rates should reflect in the performance of the market.

“The medium to long term debt management strategy adopted by the government is expected to push down the treasury bills and also improve the performance of the stock market. Also the proposal to reduce corporate income tax from 25 to 20 percent when implemented is also expected to boost listed companies as their bottom line will be improved,” Kofi Kyei asserted.

“Hopefully because interest and inflation rates are trending downwards plus stability in the foreign exchange front, I expect the companies that have been afflicted in this regard to perform better going into the future and then we can see some of these investors coming back to the equity market,” Managing Director of the GSE, Kofi Yamoah also opined.

By: Pius Amihere Eduku/citibusinessnews.com/Ghana

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