Investment bankers are urging Ghanaians to take advantage of the lower share prices on the Ghana Stock Exchange (GSE) to buy stocks of listed companies for future gains.
With only a handful of listed companies doing well on the bourse this year, stock prices have been plummeting since the beginning of the year with many investors shying away from the equities market.
The GSE Composite Index (GSE-CI) stood at 1,787.50 points as at June 30, down from 2,352.23 points at the same time in 2015 with total market capitalisation dropping from GH¢64.62billion to GH¢54.79billion over the 12-month period.
As at close of trading on Friday, the Composite Index from January has declined by 10.41percent while the GSE-Financial Index, which tracks the performance of only financial stocks, has also dropped by 13.28percent with the market capitalisation dropping slightly again to GH¢54.72billion.
Chief Executive Officer of Databank, Kojo Addae-Mensah, strongly urged Ghanaians to seize this moment to buy stocks and reap the benefits later. “I will strongly advise that this is the time to go and purchase stocks and you will be smiling in five years’ time,” he told.
Conceding that equity market has been poor this year and “worse than expected”, he is hoping that it doesn’t get any worse and the year will end at a small negative and after the elections investors will come back.
Bemoaning the “short-term thinking of Ghanaians”, Mr. Addae-Mensah hopes that Ghanaians will see the basic investment principle of buying stocks at low prices and selling them at high prices.
Seth Aryitey, Executive Director of CDH Asset Management Limited also reiterated the call on investors and the Ghanaian populace to seize the opportunity to buy stocks.
“We know the economy is down but this is the time to see opportunities and take advantage. If you look at the stock market, the share prices are rock bottom but there are hidden intrinsic values in there. So this is the time to start picking up stocks,” he said.
Mr. Aryitey noted that most people do not know enough about the stock market and so do not research properly to understand the fundamentals before buying shares.
“Most people do not understand the stock market. The higher the risk, the greater the gain and if you understand that properly you will realise that when prices are down, that is the time to buy,” he added.
Speaking on how to get people to invest and buy more shares, Mr. Aryitey said there is the need for stock market education and to give adequate information where necessary.
Managing Director of Ecobank Investments, Kesseih Antonio, told the B&FT in an interview that stocks have not been great for the past two years and that is because of the challenges the economy has seen including a power crisis that almost crippled the manufacturing sector.
But he added that, looking at the long-term value of stocks; investors should be looking at equities. “For the short-term I will not be investing in equities, but for the long-term I will definitely buy them. But even for the short-term, I will be looking for bargain stocks which offers significant upside potential,” he added.