Databank: Economic recovery to drive positive GSE performance

The Ghana Stock Exchange has experienced a significant surge in performance in the last quarter of 2024, driven by the country's strong economic recovery. Analysts at Databank believe that the positive stock market performance is a reflection of Ghana's overall economic health. Mac-Jordan Narteh, a Research Analyst at Databank, highlighted the key trading highlights of Q3, emphasizing the diversified interest across various sectors. The rally continued in Q3, with notable gains in oil marketing companies such as Toco and Total Energies, as well as the telecom sector represented by MTN. Additionally, the banking sector saw robust performance from companies like Enterprise Group PLC and GCB Bank, contributing to a market capitalization of nearly 100 billion Ghana CDs. The composite index increased by 14% in Q3, resulting in a year-to-date return of about 39.93%. Investor sentiment remains bullish on the economy, particularly following the 200-basis point rate cut by the Bank of Ghana. The rate cut is expected to ease high fixed-income yields, making stocks more attractive in the market. Databank's forecast for the market's return has been revised upwards from 20% to 40% plus or minus five percentage points. The ongoing economic recovery is projected to continue driving investor sentiment, supported by the decline in interest rates. The easing inflation pressures and reduced yields in the fixed income market are poised to support credit lending activity and stimulate consumption, benefiting FMCGs and other sectors. The inverse relationship between fixed income yields and the stock market is expected to promote investor activity in both asset classes, driving market sentiment. Mac-Jordan Narteh also highlighted specific stocks to watch in the coming months. Total Energies is expected to perform well, supported by election-related activities and eased inflation, while MTN is anticipated to benefit from the rise in mobile transactions and data consumption. Enterprise Group PLC has gained momentum and is projected to continue its positive trend in the following weeks. Overall, the Ghanaian stock market is poised for further growth as economic recovery and market dynamics align to create a favorable investment environment.