Stock Market Returns Surge After Election

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Trading on the Ghana Stock Exchange (GSE) surged following last Monday’s election, as investor confidence improved in reaction to the victory by the incumbent administration, which is seen as more pro-business.

Trading activity strengthened in value terms as 25.51m shares valued at GH¢60.5m changed hands last week—compared with 37.59m shares valued at GH¢23.2m the previous week.

The GSE Composite Index (CI), the market’s benchmark index, advanced by 34.1 points to close the week ending Friday, December 11 at 1,854.32. This amounted to a weekly return of 1.87 percent on the index.

Prior to the elections, the index had recorded a year-to-date return of -19.36 percent as of December 4. However, with last week’s performance, the index cut its year-to-date losses to -17.85 percent.

Stock Market Returns Surge After Election
Stock Market Returns Surge After Election

The market’s total capitalization increased by 0.67 percent to GH¢53.46bn, from GH¢53.1bn at the end of the previous week.

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Trading activity is expected to continue to surge until the end of the year. GDP data due to be issued on Wednesday will probably show a rebound in economic activity in the third quarter, after the Covid-induced contraction recorded in the second quarter. This will further increase investor confidence in the final weeks of 2020.

“The market would have reacted otherwise if the elections could not produce a president. That would have been seen as some level of political instability,” Kofi Bussia Kyei, an analyst at UMB Stockbrokers, said in an interview with Business24.

“Current post-electoral issues, such as the claims by the largest opposition party, are not affecting the performance of the market,” he added.

Largely, analysts had expected that the market would react better to a victory by the incumbent administration, which is seen as more pro-business than the opposition party, even though the current government has presided over the longest bear market in the history of the GSE.

Last week’s market advance was largely influenced by the GSE Financial Stock Index (FSI), which cut its year-to-date losses to -16.91 percent on December 11, from -19.65 percent on December 4.

 

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