Investment brokers have predicted a rebound in trading on the domestic bourse at least by the end of the year.
It follows concerns over a sluggish performance of some stocks on the Ghana Stock Exchange for some time now.
“If you look at all the fundamentals you would realize that most of the shares are trading at a very good Price Earnings Ratio (PER) and for most of the equities that you note over there, the share prices are not a true reflection of their values…There are intrinsic values so for proper investors looking at the long term and have foresight, this is the time to invest,” the Executive Director of CDH Asset Management, Seth Aryitey intimated to Citi Business News.
Government’s increased borrowing from the domestic market is said to have affected the performance of the Ghana Stock Exchange as the banks are inclined to investing in government bonds than provide credit to the private sector.
The issuance calendar released by the Ministry of Finance indicated that government intends to borrow an aggregate amount of about 31 billion cedis for the first half of 2016.
The latest issue it announced was a five year cedi denominated bond which it received about 800 million cedis at a yield of 24.5 percent.
Economist Dr. Ebo Turkson says the development poses a risk to the growth of the private sector to as they will be crowded out from access to credit which will be expensive as a result.
“Because Treasury bills are going to be offered at higher interest rates, credit available to investors in the economy will go to government, because banks will be inclined to lend to government rather than the private sector. Not only will those resources go to government, the resources that are left for the private sector to borrow will have to be borrowed at a high interest rate. And when that happens, we say the private sector is being crowded out of the credit market,” he said.
Meanwhile Seth Aryitey believes the retarding performance of the bourse could also be attributed to the increased preference for short term investments compared to long term ones by investors.
“Another thing in my view is that as a nation we are too much short term sighted but we must be considering looking into the long term,” he stressed.
Source: citibusinessnews.com
