Databank: Robust investor demand drives Ghana equities

The equities market in Ghana has seen a strong performance in the first quarter of 2025, following impressive full-year results and dividend announcements by listed companies. Analysts at Databank are optimistic about the market's trajectory, with a year-to-date index growth of 24%, including a 28% increase in the financial stock index. Investors have gained about 25 billion Ghana CEDs, equivalent to approximately $1.6 billion in capital appreciation. This positive momentum can be attributed to several factors, including cooling inflation, which has led to improved private consumption and boosted the top line for many companies on the equities market. The high interest rate regime has also supported growth in interest income for listed banks. This favorable economic environment has resulted in increased earnings for firms, with notable performers such as Fanmilk and Climestone showing significant earnings growth. Investors have shifted their focus from fixed income securities to equities, particularly in firms with strong fundamentals and solid trajectory. Databank's analysis suggests that listed companies that have paid out dividends are likely to benefit from higher consumer spending in 2025, which is expected to drive top-line growth. Despite a gradual decline in inflation, household consumption is on the rise, reflecting a rebound in private consumption levels. This trend is translating into revenue growth for many listed firms, including telecommunications giant MTN and fast-moving consumer goods companies like Fanmilk, Unilever, and Guinness Glamour. Although inflation has not decreased as anticipated, the slight improvement in disposable income for consumers in Ghana is supporting top-line growth for FMCG companies. The drop in yields in the fixed income market is viewed as an additional support for the equities market moving forward. The shift from high yields at the beginning of the year to the current level of around 15% on benchmark securities provides investors with more confidence to explore equities. This change has diversified gains across the market, with investors showing interest in stocks with solid fundamentals. Companies like Glystone have experienced significant growth, signaling a positive outlook for the equities market in the upcoming quarter. Overall, Databank remains optimistic about the Ghanaian stock market's performance and expects sustained growth in the second quarter of the year. The combination of favorable economic conditions, rising consumer spending, and the shift from fixed income securities to equities is driving investor demand and fueling market growth. With a focus on companies with strong fundamentals and growth potential, investors are positioning themselves for continued success in the Ghana equities market.