Uncertainty surrounding DDEP to affect equities market
Analysts have warned that Ghana’s equities market will be affected by the uncertainties arising from the impending Domestic Debt Exchange Programme (DDEP), coupled with rising interest rates and foreign exchange fluctuations.
The DDEP and the current economic climate have made investing uncertain for investors, leaving them with limited options for diversification. As a result, investors are looking forward to a conclusive agreement or arrangement with the government in order to make informed investment decisions.
SEM Capital, in its review of fourth quarter 2022 and outlook for 2023, stated that the market is unlikely to recover fully this year due to these factors. They expect further tightening of the Monetary Policy rate and interest rates to inch upward due to inflationary pressures.
On the capital market, returns of the GSE Composite and GSE Financial Stock Index are likely to decline further due to the government’s pending Domestic Debt Exchange Programme, which will have a negative impact on interest income and profits of the listed banks as their assets are mostly government of Ghana securities.
With the ongoing uncertainty surrounding the DDEP and the not-too-positive outlook for key macroeconomic indicators, investor confidence is likely to take a hit, making it unlikely for the market to recover fully this year.
This is further exacerbated by the pressure on the local currency, which is expected to have an adverse bearing on manufacturing companies as the cost of importing raw materials will increase, leading to lower production and higher prices for finished products.
