This means that unlike 2015 and 2016 when the value of investments on the market depreciated by 15.77 per cent and 11.37 per cent respectively, investors’ stakes on the market appreciated by 52.73 per cent in 2017.

An independent analyst, Mr David Tetteh, and the Head of Research at FirstBanC Financial Services, Mr Benjamin Amoah-Adjei, attributed the strong rally to a correction in the market (following the negative returns in the past two years), increased investor confidence, strong financial performance of listed companies and a moderation in interest rates on money market instruments.

“People felt like inflation was on the decline, interest rates were dropping and so there was no point to invest in, say, fixed income yields, if you could get a return on the stock exchange. And that is actually what drove the market,” Mr Amoah-Adjei told the Graphic Business on January 10.

His counterpart, Mr Tetteh, explained that although the market correction was expected, the strong financial results posted by the companies in 2017 combined well with the declining interest rates on money market investments to spike appetite for equities.

Best among peers

Last year’s return is now the third best annual return on the GSE over the last decade. In 2008 and 2013, annualised return on the GSE was 58.16 per cent and 78.81 per cent respectively, substantially higher than those posted in the years after 2007.

As a result, Mr Amoah-Adjei said, 2017’s return should be seen more as a recovery from the feverish performance in 2015 and 2016 than a bullish run.

“It was a rally alright and it is good for investors but for investors who have been investing in the market for, say 2013 and 2014, it will be right to say that they have just now come back to where they were three or four years ago,” he said.

Thanks to the rally in the GSE, the local bourse has now become the best performing exchange in 2017, among major bourses on the continent.

Although the Nigeria Stock Exchange (NSE), the Nairobi Securities Exchange (NSE) of Kenya and the Johannesburg Stock Exchange (JSE) of South Africa posted positive returns for 2017, their growths were significantly below the 52.73 per cent year-to-date return posted by the Ghana bourse.

Expected performance

The GSE’s strong performance in 2017 was largely a reflection of the state of listed companies.

Although not all the 35 listed equities posted strong performance, the Benso Oil Palm Plantation Limited (194.23 per cent), the Ghana Oil Company Limited (144.55 per cent) and Standard Chartered Bank Ltd (106.8 per cent) topped the list of gainers, with year-to-date returns exceeding 100 per cent.

 HFC Bank Limited (85.33 per cent), Total Petroleum Ghana Limited (76.5 per cent), Ecobank Transnational Incorporated (60 per cent) and Standard Chartered Bank Ltd also posted sinficant gains.

Notwithstanding the positive showing, nine companies posted negative year-to-date returns.

They include Mechanical Lloyd Company Limited (-60 per cent), Tullow Oil Plc (-36.2 per cent), SIC Insurance Company Limited (-16.67 per cent), Ayrton Drugs Manufacturing Co. Limited (-16.67 per cent), PZ Cussons Ghana Limited (-9.09 per cent), Camelot Ghana Limited (-8.33 per cent), AngloGold Ashanti Depository shares (-7.69 per cent), Access Bank Ghana (-1.22 per cent) and Mega African Capital Limited (-0.33 per cent).

Other companies, however, neither gained nor lost.

In all, total trade rose from 254.74 million, valued at GH¢247.37 million in 2016, to 518.38 million shares, valued at GH¢322.73 million in 2017.

Going forward, Messrs Amoah-Adjei and Tetteh were confident that the rebound in the performance would continue into 2018 as interest rates on money market investments, inflation and monetary policy continue to trend downwards.

“We expect interest rates to remain low, which is good. These companies which will be borrowing are going to have access to cheaper sources of funds and so we expect the financial performance to be sustained.

“If the financial performance is sustained, we know that the buyers will stay in the market and so I think 2018 will be positive as well,” Mr Tetteh, who resigned from CAL Brokers Limited, said.

Mr Amoah-Adjei, however, explained that the level of return recorded in 2017 should not be expected in 2018, given that a lot of the companies were undervalued, resulting in increased demand for their stocks.

“As we talk, a lot of these stocks are around what you and I will consider to be fair value, which means that you actually have to analyse to know which one is good or bad. What it means is people will be less willing to rush into the stock market and so we cannot expect the prices to be shooting as it did in 2017,” he said.

He, however, added that as more institutional investors push more money onto the market, the GSE should be expected to “do well on a general basis.”