Databank: Ghana equities to continue uptrend in H2’24

The Ghanaian Stock Market has defied expectations by recording a more-than-expected positive performance in the first half of 2024. Analysts at Databank have highlighted that Fast-Moving Consumer Goods (FMCGs) and bank stocks emerged as the top gainers for the period. With the first half exceeding forecasted figures, the market is poised to continue its uptrend in the second half of the year, with increased participation expected from the financial sector. Mac-Jordan Narteh, Research Analyst at Databank, joined CNBC Africa to provide insights into the outlook for Ghana's equities markets. Discussing the market performance so far, Narteh pointed out that the Ghanaian stock market had witnessed a significant rally, delivering a 21% return as of the end of the first half of the year. This performance exceeded the full-year forecast of 20%, driven by strong profitability turnaround in FMCGs and resilient performance in the banking sector. Factors such as the gradual slowdown of inflation and its positive impact on consumer demand have contributed to the market's impressive rally. Investors have been actively seeking returns in various sectors, with a focus on undervalued stocks. Narteh highlighted FMCGs like Unilever, Farnwell, and Guinness Ghana, along with telecom giant MTN and the gold ETF as top spots for investment. Looking ahead, investors are keen on the performance of banking stocks in the next half of the year. The banking sector, despite remaining largely undervalued, presents an opportunity for investors due to factors such as high yields on government short-term securities, lower impairment provisions, and improved operational efficiency. Banks like GCB and Ecobank have shown significant declines in impairment losses, leading to notable increases in earnings. These improvements, coupled with high interest rates on government securities, have enhanced investor sentiment towards banking stocks. Economic developments, including debt restructuring exercises and currency strength, have positively influenced investor sentiment and business confidence in Ghana. Narteh emphasized that slowing inflation has supported consumer expenditure, leading to improved business confidence and top-line growth for listed companies, especially FMCGs. Additionally, a positive outlook is held for the Ghanaian cedi, supported by factors such as improved reserves, expected inflows from the IMF, and syndicated loans. In conclusion, Narteh expressed optimism regarding the Ghanaian equities market's outlook, citing the resilience of banks and the positive economic indicators as key drivers for continued growth. With a strong first half behind them, investors are looking forward to a promising second half of 2024, backed by solid fundamentals and market dynamics.