The Ghana Stock Exchange Composite Index (GSE-CI) – the key indicator of performance of stocks on the exchange – dropped by 12 per cent in the second quarter of 2020.
The fall in the GSE-CI according to the Bank of Ghana in its Second Quarterly Bulletin, was as a result investors seeking after safe-haven assets to minimize their risk exposures due to the Covid-19 pandemic.
The drop in the GSE-CI consequently affected the market capitalization of the GSE, as its market capitalization fell by 5.4 per cent.
BoG is however, confident of a recovery of the GSE-CI – a marginal recovery – in the ensuing quarter (Q3) as market risks and lockdown restrictions posed by the pandemic continue to ease.
The 12 per cent fall in the GSE-CI was driven by significant losses in value of stocks of companies in the Food & Brewery (-37.9 per cent; -450.38 points), Agriculture (-12.3 per cent; -70.00 points), Distribution (-8.0 per cent; -183.59 points) Finance and IT (-13.2 per cent; -3.26 points) sectors.
An impressive gain of 12 per cent (31.05 points) in the value of stocks of NewGold Issuer Limited (GLD), an Exchange Traded Fund (ETF), moderated the slippage in the GSE-CI.
GLD attracted investors as investors sought refuge in the “safe haven” asset. The Manufacturing sector stocks also gained 0.2 per cent (3.30 points) as some
investors envisaged a pick-up in production and consequently a marginal improvement in profits due to the easing of lockdown restrictions imposed by the Government.
The Mining, Education and Advertisement & Production sectors stocks recorded no changes during the quarter under review.
For the review quarter, total volume of trade on the GSE amounted to 162.74 million shares, valued at Ghs 117.16 million, while in the corresponding period in 2019 a volume of 78.82 million shares valued at Ghs 61.64 million was recorded.
The increase in trade reflects an improvement in secondary market activity and therefore bodes well for the domestic financial system.