Brokerage firm, Databank is forecasting the positive performance of the Ghana Stock Exchange to continue in the second half with the stock market expected to close the year at 4,380 points.
The GSE’s performance has already exceeded earlier forecasts, with the index closing the second quarter at 3,829.61 points.
“From a technical analysis standpoint, we expect the GSE-CI to close at 4,380 points, reflecting 40% (±500bps),” the firm said in its quarterly report.
This performance has been driven by continued investor interest in stocks, particularly in the fast-moving consumer goods (FMCG), telecommunications, oil marketing, and financial sectors.
According to Databank, management of the local bourse must however be wary of potential profit-taking and some volatility as elections draw closer.
Per the report, the fixed-income market remains sluggish following the Domestic Debt Exchange Programme (DDEP), leading more investors to shift their focus to equities.
Databank Research attributes the GSE’s strong performance to a stabilizing macroeconomic environment, supported by successful engagement with the International Monetary Fund (IMF) and debt restructuring efforts.
“The Ghanaian economy is reaping benefits from a well-executed IMF programme, fostering stability and nurturing a positive earnings growth outlook across various sectors,” the report from Databank’s research arm stated.
“This stability is expected to further cement investor confidence in equities.”
In the banking sector, despite initial setbacks from the DDEP, there are signs of robust recovery. First-quarter results for 2024 revealed a 53% year-on-year growth in net profits, primarily driven by a 31% increase in interest income.
“The banking sector, having recorded significant earnings growth in 1Q ’24, is expected to continue this positive trajectory, demonstrating its resilience and stable earnings growth, it noted.”
However, the sector faces challenges, with non-performing loans averaging 24.5% in the first quarter of 2024, up from 14.9% in the same period last year.
Despite these impediments, many bank stocks are trading below their book values and historical averages, which Databank describes as “a compelling buying opportunity for investors.”
Source:citinewsroom.com
