DataBank: Banks’ earnings recovery to stimulate interest

DataBank analysts are optimistic about a potential earnings recovery in Ghana's banking sector this year, which is expected to stimulate renewed interest in bank stocks. Alex Boahen, the Head of Research at DataBank, shared insights during an interview with CNBC Africa regarding the 2023 performance of the Ghana Stock Exchange and the outlook for 2024. Boahen highlighted the strong link between the stock market and the economy, suggesting that as the economy improves, the market is likely to follow suit. He pointed out significant improvements in key economic indicators, such as a notable decrease in inflation rates compared to the previous year. However, technical difficulties interrupted the interview, hindering a comprehensive discussion of the financial stock index and the potential impact of the domestic debt exchange program on banks' margins. Boahen mentioned progress in negotiations for the restructuring of bilateral debt as part of the domestic debt exchange program. Market watchers are keenly observing these developments as the receipt of the second tranche of the IMF bailout fund hinges on successful international debt restructuring efforts. The uncertainty surrounding the debt restructuring has been a key concern affecting the Ghanaian cedi in recent months. Despite the challenges, 2023 saw several stocks performing well on the Ghana Stock Exchange. Companies like Bessu Oil Palm, Total Energies, Unilever Ghana, Guinness Ghana, and MTN emerged as some of the best performers. These successes indicate potential opportunities and growth prospects in the Ghanaian market for investors. With expectations of an earnings rebound in the banking sector and ongoing efforts to address debt concerns, the stage is set for a potentially positive year ahead in Ghana's financial landscape.