Profit-taking opportunities greet Stock Exchange

After closing with a moderate gain of 2.29 percent week-on-week in last week, the next week is expected again to be upbeat on Ghana Stock Exchange (GSE) with lots of positives for traders and investors, who, in their profit taking activities, gained a decent return from equities trading in all the sessions of the week.

The profit taking moment was buoyed by gains recorded in some of the tickers within the consumer goods and financial sector, plus the continued rally in oil prices which was also reflected in the only oil and gas stocks on the exchange during the week.

In the second week of the month, equities analysts have expressed the view that there exist attractive buying opportunities for profit taking in the market on key sectors like consumer goods (Fan Milk Limited and Guinness Ghana Breweries Limited), telecoms and petroleum, while the recent holding of rates steady is also weighing on broad based sentiments in the market.

In recent days, the equities market has slipped into a bearish pattern as investors continue to take profits off the market in light of the recent rising yields on the short end of the market. According to analysts, this has created an attractive buying opportunity for investors as the final earnings and dividend season draws closer.

Analysts remain bullish on key sectors like Consumer goods, banking and insurance, and Oil & Gas etc. While experts expect the risk of higher interest rate to likely weigh on broad based sentiments, it is projected that the previously highlighted sectors will outperform the broader market on the back of robust earnings performance and dividend declarations.

Underpinning this is a clear indication, and in line with the notions from equities analysts, that the bets by domestic investors on the market since the start of the year will begin to pay off with the local bourse returning over 28.48 percent year to date and an increasing market capitalization.

Change

In a strong-willed consideration of the positive rally during last week, there was a revered change witnessed across boards based on the high expectation for a continued spook in yields in the fixed income space, and causing equity investors to increase reallocations to equities.

Also, a cursory analysis points to the fact that the stellar outing was majorly precipitated by improved investor sentiment; a strong buying interest which was spurred on by bullish expectations on corporate earnings from investors; plus the positive price appreciations and movements on the index.

Just like witnessed in the first half of the year performance, where the rally in the local bourse was broad-based with all the major sectors closing higher and in the green zone, led by the oil and gas, consumer goods, banking sector, industrial goods, and information technology sectors, the final half year is likely to follow same path.

These gains recorded by major counters across sectors come on the back of huge buying interests and pressures on major tickers on the exchange, while the month of September was not left out of the party after the continued churning out of impressive earnings for the third quarter by some top counters in the financial indices drove gains across boards.

Across the sectoral front, an analysis showed that the financial sector led by Ecobank Ghana spearheaded the rally, gaining 2.85 percent week-on-week.

Still on positive drivers during last week, agriculture stocks led by Benso Oil Palm Plantation (BOPP) and telecom stocks being led by MTN Ghana also rallied significantly during the week. On the other hand, some notable Insurance and Banking sector stocks such as Cal Bank and SIC Insurance lost marginally during last week session.

Moreover, the month of September was greeted by the surprising steady outcome of the Monetary Policy Committee (MPC) gathering for the 114th meeting, where the apex bank maintained the MPC rates. This, however, threw a spanner in the works as investors feared a subsequent surge in interest rates the November meeting. As a result, the mood of the equities market changed in the first week of trading days with investors taking profits off the market.

All in all, the Ghana Stock Exchange outlook is still downbeat as the global markets continue to experience lukewarm investor sentiment mainly due to the synchronised shift in monetary policy stance across most central banks that has triggered upward pressure on interest rates, forcing investors to reduce their equities exposure.