The Ghana Stock Exchange (GSE) is poised for another year of positive growth in 2024, with projections by advisory firm Databank indicating a potential return ranging between 15 percent and 25 percent. The optimistic forecast is based on an improved macroeconomic environment, expected to contribute to robust performances across various sectors of the exchange.
In the previous year, the GSE Composite Index (GSE-CI) recorded an impressive 28.08 percent return, driven by investor preference for equities amid developments in the debt market.
Databank, in its Africa Quarterly Report titled “From Fog to Clearing Skies: Shooting for Sustainable Growth,” expressed confidence in the equity market’s continued success in 2024. The report cites a more favorable macroeconomic backdrop, a strengthening Ghanaian economy, easing inflation, and a stable outlook for the local currency as factors likely to positively impact corporate earnings, generating increased interest in equities.
According to the report, technical analysis supports the prediction that the GSE-CI index will likely close the year around 3,756 points, translating into an estimated annual gain of 20% (±500bps).
Investors are expected to capitalize on undervalued stocks, particularly in the financial sector, where historical undervaluation has led to a price-to-earnings ratio of 6x, well below the market’s average of 10x.
Databank anticipates a re-rating of banking stocks in 2024 following the successful completion of the debt-swap exercise. Factors such as recapitalization, reduced impairment provisions, and improved efficiency position banks as better-equipped to absorb shocks, offering potentially profitable long-term investments.
In the telecommunications sector, market leader MTN is predicted to maintain its strong performance, supported by consistent financial results and dividend payouts. The report highlights positive moves, including heavy infrastructure investments and recent price increases, as drivers for future growth and profitability.
Fast-moving consumer goods (FMCG) companies like Unilever Ghana, Guinness Ghana Breweries, and Fan Milk are expected to benefit from a rebounding economy. The oil marketing sector is considered a defensive play, with TotalEnergies and GOIL predicted to make gains from rising fuel demand and a favorable economic outlook.
In January 2024, the GSE continued its positive trajectory, with the market returning 1.35 percent overall. Leading the charge were Guinness, Unilever, and Total, posting impressive returns of 30.6 percent, 9.7 percent, and 5.6 percent, respectively. Access Bank’s stock price appreciated by 8.8 percent, contributing to a 0.45 percent return for the financial segment.
Photo ( The Vaulz)
By: Delino Gayweh
Serrari Financial Analyst
February 6, 2024
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