…with finances, fast-moving consumer goods driving the Accra stock exchange to its best performance in a decade

By Ebenezer Chike Adjei NJOKU

The local stock market is expected to generate returns ranging from 55% to 65%, specifically around 60% (with a margin of ±500 basis points), by the end of 2025, as reported by Databank Research. The Ghana Stock Exchange Composite Index (GSE-CI) is anticipated to finish the year at 7,828 points.

According to the Ghana Market Outlook for the second half of the year, this projection follows increased investor movement towards stocks as Treasury bill rates decline, along with steady currency stability and strong corporate performance driven by the banking industry. Should these expectations materialize, it would mark three successive years of gains, surpassing last year’s return of 56.17%, 2017’s 52.73% and coming after the 78.81% achieved in 2013.

The forecast takes advantage of the positive trend seen during the first half of the year, when the GSE-CI hit 6,248.48 points even though the stock that had the biggest impact on the market—MTN—fell after revealing plans to reorganize its MobileMoney Ltd (MML) into a separate entity called New FinCo, in line with regulations for payment systems and services.

Earlier this year, Databank predicted a more moderate gain of 40 to 50 percent, equivalent to 6,850 points. The better-than-anticipated projection stems from quicker-than-expected price declines, a loosening monetary policy climate, and a surge in banking sector shares.

Interest rates for short-term government instruments, which had exceeded 30 percent during the height of inflation, have decreased significantly. In the first quarter, the 91-day T-bill fell to 15.71 percent, whereas the 182-day and 364-day bills dropped to 16.73 percent and 18.65 percent respectively.

By June, the rate for 91 days had dropped further to 14.69 percent, the 182-day rate to 15.25 percent, and the 364-day rate to 15.66 percent. As returns on fixed income decreased, both institutional and individual investors moved their funds into stocks, especially financial shares that provided dividend yields.

The financial services industry has become a key driver of the market surge, with the GSE Financial Stock Index (GSE-FSI) rising 41.8% during the first half of the year, reaching a 14-year peak of 3,376 points.

This built upon the robust increases seen during the initial quarter, where the sector rose by 28.5% — marking its strongest quarterly result in seven years. Revived dividend distributions, enhanced asset conditions, and stable profits have driven this rebound, with GCB, Ecobank Ghana, and Standard Chartered standing out as leading contributors. Databank anticipates additional dividend announcements in the latter part of the year to bolster market values.

“According to the report, from a technical analysis standpoint, we have updated our end-of-year projection for the GSE CI to 7,827.56 points—suggesting an annual gain of roughly 60.12% (±500 basis points),” the document mentioned.

“The financial industry is anticipated to stay strong during H1 ’25 despite challenges caused by reduced yields on short-term government bonds. Banks continue to implement solid credit evaluation processes even with falling loan interest rates. Financial Stability Indicators (FSIs) indicate ongoing increases in assets, better capital adequacy, profit margins, and cash reserves. The proportion of non-performing loans has decreased, aided by a lower rise in NPL volumes compared to the rate of credit increase,” it noted.

Insurance has also generated impressive returns. State Insurance Company increased by 322% in the first half, reaching a 17-year peak of GH¢1.14 per share, following improved profit performance and significantly wider margins. This sector is expected to “gain from increasing household discretionary income.”

In contrast, the NewGold ETF was the sole underperformer in the market, dropping 10.6 percent as the strengthening cedi reduced local gains even with high gold prices.

Companies that directly serve consumers are also gaining advantages from the enhanced operational conditions. Fan Milk reported strong revenue growth during the first half of the year and is making significant investments in branding and market reach, whereas Unilever is experiencing a rebound in sales volumes even amid challenges with profit margins. Guinness Ghana Breweries, supported by higher prices and a new marketing strategy, is anticipated to maintain steady profitability throughout the year.

Agricultural-related stocks continue to attract attention. Benso Oil Palm Plantation is expected to see further increases due to higher international crude palm oil prices, better production efficiency, and a careful approach to dividends. The firm’s revenue has grown by approximately 30% each year since 2020, with leadership expanding processing capabilities to boost output.

In total, the market had 18 stocks rising against just one declining. However, overall trading activity declined: volume dropped by 74.2% from the previous year to 150.9 million shares, while turnover decreased by 5.2% to GH¢933 million, highlighting low liquidity in the secondary market.

Nevertheless, challenges persist since limitations on liquidity might still restrict trade levels, while budget shortfalls and debts within the energy industry could negatively affect confidence. On the external front, a more robust U.S. dollar or significant fluctuations in commodity costs might have an adverse impact on the projection.

Databank, nevertheless, continues to hold an optimistic view. It points out MTN Ghana, GCB, Ecobank, Standard Chartered, Benso Oil Palm Plantation, TotalEnergies, Unilever, and Fan Milk as leading recommendations through the end of the year.

The company observed that falling production levels, slowing price increases, and a steady exchange rate create a positive setting for businesses, and they expect further improvements by the end of the year.

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