GSE sees upturn in September as bond market rebounds

A report by the GSE shows the market has rebounded with 9.49 billion in trade, valued at GHC9.699 billion – the second highest in the market’s history

The Ghana Stock Exchange (GSE) has seen a recovery in September, driven primarily by activities in the bond market and Ghana Fixed Income Market (GFIM) after a chaotic performance in August.

Following an all-time high of 10.02 billion in volume of trades recorded in July, the market witnessed a significant dip of 43.01%, as 5.71 billion trades were made in August.

The market has however rebounded with 9.49 billion in trades, valued at GHC9.699 billion – the second highest figure in the market’s history after July, over the five-year period since the GFIM’s inception in August 2015, according to a report by the GSE.

Value of trades soars

The figure represents a 66% increase over the volume of trades in August 2020 and is an impressive 134% higher than the 4.04 billion trades during the corresponding period of 2019.

Furthermore, the cumulative year-to-date (YTD) volume of trades at 74.74 billion was an increase of 95% on the 38.22 billion recorded at the same point in 2019.

For additional context, the 2020 YTD volume of trades dwarfs the 55.55 billion recorded for the whole of 2019. Consequently, GHC76.26 billion was recorded as the value of trades between January and September, compared to GHC37.39 billion over the same period in 2019.

Liquidity support

A number of factors have been suggested as possible reasons for the bond market’s buoyancy, including a return to relative normality following the apparent win in the battle against COVID-19, but the GHC3.56 billion made available by the Government of Ghana to settle customers of defunct financial institutions is considered the most likely cause. Liquidity in the market stood at 68% at the end of September.

It made for different reading in the equity market, as there was a 45.07% dip in the volume of high-volume block trades, with 25.27 million recorded in September – down from the 46.01 million traded in August.

This is despite an increase in retail activity over the course of the month as the number of transactions rose from a total 944 in August to 1,087 in September. Consequently, the value of trades fell by 39.04% to GHC22.65 million, compared to the GHC37.16 million recorded in August 2020.

Consequently, the GSE Composite Index (GSE-CI) closed September 2020 at 1,856.56 points, a marginal increase of 0.54% from the 1,846.59 points at the close in August, but 15.79% lower than the 2,204.79 for the 2019 period.

The total YTD volume was GHC404.92 million and value traded was GHC295.20 million.

“Adjusting for the significant block trade in Ecobank Transnational Incorporated shares that occurred in September 2019, when 3.48 million shares valued at GHC348.73 million changed hands, the total volume and value traded during the first three quarters of 2020 were up 59% and 38% compared to the same period of 2019,” the report adds.

While market capitalisation in the equity market experienced a 1.13% appreciation, from GHC52.57 billion in August to GHC53.16 billion in September, this represented a 5.5% dip on the GHC56.25 billion during the same period in 2019.

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