Business News of Friday, 28 December 2018
The bullish performance of the Accra Bourse in 2017 led most analysts to predict a continuation of the trend on the back of favorable economic indicators expected in the year 2018.
Stability of the cedi, lowering of interest rates, declining inflation, stable power supply, amongst others are some of the reasons given for the positive predictions.
The cleanup in the banking sector was also a factor identified to shore up the position of the Ghana Stock Exchange due to the renewed confidence it’s expected to bring into the system.
In fact investors have always been encouraged to take positions in some selected stocks awaiting a stronger financial system by year end and beyond.
Taking positions in the beginning of the year was not a bad decision as indicators at the time pointed in the affirmative. Indeed the investors who took the decision have been vindicated by the returns chalked within the period.
Slow decision makers however have been the biggest losers mostly in the market.
As it always happens, the “let’s-wait-and-see-investors”, hopped in mainly in the first half of 2018 hoping to earn some returns by year end.
The first half of 2018 was generally good for investors recording a year high of 35.62% in April before slowing to 11.62% by end of June.
Within the period some individual stocks such as Societe General, GOIL, CAL Bank and TOTAL recorded year highs of 65.83%, 45%, 44.67% and 41.17% respectively.
The slow decision makers entered the market when the market had returned these highs, yet were expecting more returns going forward. The lows started when investors started booking some gains. Around May, selling pressure started mounting, pushing down prices.
There were also dumping on the market by investors to participate in the MTN IPO which commenced in June, and gathered momentum in July.
I am on record as predicting a market recovery as soon as the MTN IPO was over. Indeed after the IPO, the recovery started.
However the banking crises, causing liquidity challenges ensured the recovery was not sustainable.
Though none of the banks the Consolidated Bank took over is listed banks, some large investors have mentioned the difficulty in retrieving their invested funds from the bank and other finance houses prompting them to fall on the GSE to raise funds to meet their needs.
Rates on the bond markets have looked attractive in recent times, some hovering around 19%.
In this situation, the rational investor knows always know which investment option to take.
Investing in the GSE requires attentiveness, patience and quick decision making.
It is important investors’ do in-depth market analysis before taking decisions.
Always seeking advice from market players is very important, and also paying attention to every information available for consumption.
For those who think the market has been a disaster in 2018 should be biting their fingers upon sighting the big highs in the year.
Data Source: GSE, BOG