Ghana’s stock exchange was the best performing market in the world last year, but has suffered this year in the global economic crisis. Now, an oil boom is putting the west African country back on track.
After rising 58.06 percent last year, the Ghana Stock Exchange (GSE) has fallen 47.87 percent so far this year as foreign investors shunned assets considered risky while local investors sought refuge in short-term securities.
Market observers say the bourse will bounce back in the year ahead as Ghana prepares to pump out oil for the first time, with interest rate cuts, a strong local currency, the cedi, and falling inflation also boosting confidence.
“We are expecting GSE All-Share index to climb to about 35 percent as commercial oil production will commence in the last quarter of next year,” said Edem Dewortor, a stock analyst at Ecobank Development Corp.
The GSE-All Share index gained 2.04 percent from Monday to Thursday last week before closing for Christmas break.
Ghana, which is gearing up for oil production late next year, has tightened fiscal policy over the year in a bid to tame inflation stuck at around 20 percent for most of this year.
Inflation reached 16.92 percent year-on-year last month, the fifth consecutive monthly fall. The figure is a significant drop from October’s 18.04 percent rate but still above the government’s target of 14.5 percent by the end of the year.
The country has been on the world energy map since 2007 when oil was discovered at the offshore Jubilee field, believed to hold some 1.8 billion barrels of reserves.
Ghana is the world’s second biggest cocoa exporter after Ivory Coast and Africa’s second-largest gold producer.
Accra forecasts the economy will grow by up to 10 percent next year for 6 percent this year.
A source at the Ghana Stock Exchange said that strong economic factors, as well as new listings, would boost stocks in the new year.
“We expect a strong and steady rate of recovery on the stock market next year … Market volume and turnover are expected to improve further,” he said.
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