Signs 

The signs are already there. For instance, total volumes traded for the first nine months of the year have plummeted by 44.8 per cent to 64.4 million as of September 14, this year.

By the same period last year, total volumes traded equaled 116.4 million.

The slowdown in total trade has already led to share price depression on the bourse, with majority of the share prices remaining virtually unchanged since January, this year.

These challenges have dragged overall year-to-date (YTD) return on the GSE to negative 10.86 per cent as of September 14, strengthening fears that the marked improvement in the macroeconomic environment will do little to lift the depression the exchange went through in 2015.

Election year trends

While the drop in volumes of trade is a normal occurrence in almost all election years (except in 2008, when volume of trade almost doubled to 531.7 million), this year’s drop would be substantially steep as the exchange struggles to recover from the 2015 challenges and their spillover effects on market activities.

This double blow – the spillover of last year’s depression and this year’ election-related anxieties – should make happenings on the bourse interesting to both market participants and shareholders, the Head of Research at Databank, Ms Doris Yaa Aggrey Ahiati, told the GRAPHIC BUSINESS on September 16.

“In typical election years, you will see that the volume of investment goes down at a certain point. It goes down because a lot of investors are not always interested in picking up investments when they can’t see their way clearly,” she said, referring to the anxiety election years create for investors all over the world.

“Now, this year is even interesting; Interesting in the sense that last year, the market was not inspiring because of the bad macroeconomic environment,” she said.

In that year, return on the local bourse plummeted by 11.77 per cent, then making the GSE the fourth worse performer in Africa after the Egyptian CASE 30, the Nigerian Stock Exchange and the Mauritius SEMDEX.

While admitting that election years could have an impact on the operations of the exchange, the Deputy Managing Director of the GSE, Mr Ekow Afedzie, said the issue of stock market performance needed to be looked at holistically.

With the performance of the market tight largely to the state of the economy, Mr Afedzie said it would be unfair to limit the state of the exchange to only elections, when the macroeconomic indices could be the biggest determinants.

“When there is less activity, it can imply either others are holding and do not want to sell or others do not want to come in. Others may not be coming in because of other factors and others are holding on because they believe that the prices are not good at this time,” he said.

“But whatever the case, you have to know that it is an issue of macroeconomic environment. I do not know if it is better now than last year but even if they are better, it is still high and that will normally lead to less activity on the stock market,” he added.

In most cases, high interest rates, rising inflation and unstable macroeconomic indices normally push investors from stock market instruments into patronising fixed income securities, which normally promise higher retuns.

Share prices 

The dampened performance of the exchange in 2015 was one of the pass-through effects of the lackluster performance of the listed companies within the period.

In that year, the operations of businesses, including those listed on the GSE, were subdued by a combination of factors, including the fiscal slippages, a tight monetary stance and the erratic power supply, which continued until the first quarter of this year.

These challenges resulted in the posting of weak performance by the companies and that led to a slowdown in market activities on the GSE.

Although the challenges have improved, albeit slowly, Ms Ahiati said it has failed to ignite excitement on the exchange.

“This year, the macroeconomic environment has improved a bit but share prices are still depressed,” she said.