GSE: Foreign investor participation on local bourse decline by 17% – Report
Equity market trades by foreign investors, according to the GSE Monthly Market Report, accounted for 68% of total equity trades on the Ghana Stock Exchange (GSE) as at the end of the second quarter of 2021.
This compares to some 85.43% of total equity trades executed by foreign investors for the same period in 2020, and is indicative of a decline of foreign investors’ participation on the local bourse by some 17.43 percentage points.
The fall in foreign investor participation can be attributed to the impact of the COVID-19 pandemic on the economy, which consequently saw prices of listed stocks fall.
As such, to protect their investments, foreign investors moved their funds into safe haven assets such as gold, which gained tremendously in price during last year as the pandemic raged on.
Foreign participation on the local bourse has, however, seen some boost on the back of the significant pick-up in economic activities necessitating the gradual recovery of the economy coupled with the country’s first mass vaccination exercise and current low spread rates of the COVID-19 pandemic in the country.
The aforementioned factors, particularly, the rise in foreign participation on the local bourse, is evidenced by the bullish run of the GSE since the beginning of this year.
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The GSE-Composite Index, which measures the price performance of listed stocks on the local bourse has for the first half of this year has posted a year-to-date return of 36.16 percent beating its peers on the continent.
It has also recorded a year-on-year return of 15.83% in cedi terms to investors.
The local bourse’ market capitalization for the review period has also increased from GH₵ 53 billion at the end of 2020 to GH₵ 61 billion at the end of Q2, 2021.
The decline in foreign investors’ participation on the local bourse bodes well for the country’s capital market and the economy at large, as it indicates that local investor participation on the GSE is on the rise.