GSE sees 230% surge in value of shares traded by 3Q 24

The Ghana Stock Exchange (GSE) recorded an increase in trading activity by end-September 2024, with value of shares traded reaching GH¢1.85billion – representing a 230.38 percent rise year-on-year (YoY) compared to GH¢560.77million over the same period in 2023.

The increase in market liquidity was matched by a 126.17 percent jump in total volume of shares traded, from 412.6 million in 2023 to 933.2 million for 2024.

The growth in trading activity highlights renewed investor confidence in the GSE, particularly for key sectors such as ICT and finance.

Speaking on the overall market growth, analyst with Young Investors Network(YIN) Kofi Kyei Busia said: “The Ghanaian economy is experiencing positive growth, with quarterly and annual GDP improving steadily across key sectors. This recovery is reflected in the Ghana Stock Exchange performance, driven primarily by a bullish banking sector. After overcoming recent challenges, the sector’s balance sheets have grown significantly between June and July, signalling continued confidence in the market as the year progresses.

“MTN Ghana and top-tier banks like StanChart, Access Bank and GCB Bank are performing strongly, boosting investor interest. With limited attractive options in bonds and Treasury bills, the stock market offers a promising alternative – especially for pension fund managers. The market is expected to continue its upward trend, potentially mirroring its strong performance from 2017,” he explained.

Sector dominance

The ICT sector, spearheaded by MTN Ghana (MTNGH), continued to dominate trading; accounting for a staggering 95.23 percent of total volume traded by end-September. MTNGH’s share value alone amounted to GH¢1.45billion, representing 78.16 percent of total value traded on the exchange. This makes the telecom giant the primary driver behind GSE’s liquidity growth in 2024.

The financial sector also showed strong performance, with stocks such as Ecobank Ghana (EGH), GCB Bank (GCB) and CalBank (CAL) contributing significantly to the market’s overall turnover. Ecobank Ghana’s traded value amounted to GH¢31.15 by end of September, while GCB Bank and CalBank posted GH¢9.1million and GH¢8.3million respectively.

Market capitalisation growth

In addition to the surge in trading activity, GSE’s total market capitalisation reached an all-time high of GH¢99.1billion at end-September 2024; marking a 34.12 percent year-to-date (YTD) increase. The domestic market capitalisation also rose sharply, by 59.75 percent to GH¢55.48billion; reflecting the growing influence of Ghanaian-listed firms in overall market performance.

MTN Ghana’s commanding position was evident in market capitalisation as well, contributing GH¢28.85billion and making it the largest stock by value on the exchange. The financial sector contributed GH¢21.87billion, driven by strong performances from key banks.

While GSE’s market performance remains robust, the broader economic environment poses challenges. Ghana’s inflation rate, though declining, remains elevated at 20.9 percent as of September 2024… down from 40.1 percent a year earlier. The Ghanaian cedi has also depreciated significantly against major currencies, with the USD/GHS exchange rate reaching GH¢15.80 compared to GH¢11.13 in September 2023.

Interest rates, while lower than last year, continue to weigh on the economy. Yield on the 91-day Treasury bill stood at 25.64 percent in September 2024, down from 28.80 percent a year prior.

Other market analysts express the view that given the present high inflation and interest rate environment risks to the market, the strong investor interest we are seeing suggests that confidence in Ghana’s equity market is still intact.

Sectoral breakdown

Aside from ICT and finance, the mining, manufacturing and food and beverage sectors also made notable contributions to GSE’s growth. The mining sector, driven by AngloGold Ashanti (AGA) and Tullow Oil (TLW), contributed GH¢40.9billion to total market capitalisation, while the food and beverage sector – led by Guinness Ghana Breweries (GGBL) – saw its market value rise significantly.

The financial sector experienced strong stock price appreciation, with GCB Bank’s shares rising by 76.47 percent YTD to GH¢6.00 while Ecobank Ghana’s stock rose by 10.91 percent to GH¢6.10. MTN Ghana’s share price appreciated by 55.71 percent YTD, closing at GH¢2.18 in September.

Outlook

Despite the strong performance to date, the market remains cautious about the potential impact of broader economic factors such as inflation and currency volatility. The exchange expects continued growth in key sectors, but is mindful of external risks that could weigh on market sentiment in the coming months.

“However, despite these improvements, caution is advised. While corporate bonds and lower-tier banks present some investment opportunities, top-tier banks are seen as more secure – given their ability to absorb economic shocks. As the economy is still in recovery, investors are urged to assess their options carefully to avoid potential losses and focus on more stable financial institutions and stock market investments,” Mr. Kyei said.