Market indices retreat on the back of profit taking activities by investors

The Composite Index (CI) has consistently declined in the past 4 weeks shedding off approximately 451 points, having peaked at 3489.45 (CI-YTD: -35.26%) at the end of April 2018. The decline in the overall market return in this period has been largely driven by capital losses on financial stocks (CAL, EGL, SCB, SOGEGH, ETI, EGH, ACCESS, GCB & SIC). Share prices of CAL, EGL, SCB & SOGEGH have tumbled by 27% on the average. TOTAL, FML, GOIL, and CMLT are stocks outside of the financial and banking sector whose share prices have also slipped in this period.

The dip in share prices could be attributed to profit taking activities by investors.  It is also worth noting that most listed banks are not paying dividends for the 2017 financial year, capitalizing their income surplus to meet the minimum capital requirement and issuing bonus shares. Shareholders are therefore well incentivized to sell off some of their shares to compensate for the lack of dividends in a period where share prices have appreciated significantly, rewarding investors with good returns.  Profit taking activities are likely to continue in the short-term as some financial stocks still hold gains for investors.

               Figure 1: Composite Index YTD return

 

Trading activity on the local bourse ended on a negative note with the Composite and the Financial stock indices losing 26.75 points and 28.06 points to peg at a YTD return of 16.74% and 19.08% respectively. There were 4 gainers (UNIL, EGL, ETI & RBGH) and 7 losers [GCB, TOTAL, ACCESS, SOGEGH, EGH, TLW & GOIL] at the end of yesterday’s trade. ETI topped the charts in terms of trade as 1,640,400 shares worth GHS 328,056 changed hands.

On the Ghana Alternative Market

Trading on the Ghana alternative Market was hushed as no shares changed hands.

On the Currency market

The Cedi appreciated marginally against the Pound but lost to the Dollar and the Euro at the end of yesterday’s trade. The local currency exchanged at a mid-rate of GHS 4.4430 to the USD, GHS 5.9452 to the GBP and GHS 5.2473 to the EURO. The GCFM Cedi index, a measure of the holistic performance of the Cedi on the interbank market now records a year-to-date depreciation of 0.03%.

 

By GN Research

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