GHANA STOCK EXCHANGE WEEK FROM 16-03-20 TO 20-03-20

GHANA STOCK EXCHANGE WEEK FROM 16-03-20 TO 20-03-20 WENT DOWN A LITTLE IN THE LAST WEEK, BUT IS THAT SURPRISING? FOR MORE INFORMATION, GO TO https://gse.com.gh/

COMPARED TO OTHER STOCK EXCHANGES AROUND THE WORLD, THE DOWNWARD MOVEMENT OF THE GHANA STOCK EXCHANGE IS INSIGNIFICANT. THIS MIGHT HAVE SEVERAL REASONS.

FIRST OF ALL, THE COMPANIES LISTED ON THE COUNTRY’S STOCK EXCHANGE ARE NOT EXPOSED TO INTERNATIONAL MARKETS. AT LEAST, THE EXPOSURE IS NOT AS IMPORTANT AS THAT OF DEVELOPED FINANCIAL MARKETS.

SECOND, THE FINANCIAL MARKETS IN GHANA ARE NOT VERY LARGE IN TERMS OF MARKET CAPITALISATION. ON ONE HAND, THAT MEANS THAT EVEN A SMALL SELL-OFF COULD INFLUENCE THE PERFORMANCE OF THE STOCK MARKET. ON THE OTHER HAND, NOT MANY INVESTORS WILL SELL THEIR STOCK PORTFOLIO FAST BECAUSE OF THE VIRUS. OF COURSE, THAT CAN CHANGE IF THE CORONA VIRUS WILL SPREAD FASTER IN THE COUNTRY. UNTIL NOW, THE SPREAD IS NOT VERY SIGNIFICANT. BUT THAT CAN CHANGE FAST…

THIRD, THERE ARE NOT MANY RETAIL INVESTORS IN GHANA’S FINANCIAL MARKETS. RETAIL – OR INDIVIDUAL – INVESTORS ARE MORE INFLUENCED BY BEHAVIOURAL ASPECTS THAN INSTITUTIONAL INVESTORS. THEREFORE, THEIR INFLUENCE ON THE STOCK MARKET IS NOT AS GAME-CHANGING AS THE ONE OF INSTITUTIONAL INVESTORS.

WHAT US NOW THE CONSEQUENCE OF THE FOREGOING ASPECTS?

FIRST, WE MUST ACKNOWLEDGE THAT DEVELOPMENTS OF FINANCIAL MARKETS AND THE WHOLE ECONOMY ARE NOT ALWAYS SYNCHRONISED. THIS IS TRUE, ALTHOUGH THEY MIGHT INFLUENCE EACH OTHER. TO SOME EXTENT, A STRONG INFLUENCE OF THE VIRUS ON THE ECONOMY DOESN’T AUTOMATICALLY MEAN THE SAME ON FINANCIAL MARKETS.

SECOND, WE ARE ONLY AT THE BEGINNING OF OUR “CORONA VIRUS CAREER”. WE MUST SEE HOW SUCCESSFUL OUR FIGHT AGAINST THE VIRUS WILL BE IN THE NEAR FUTURE. THIS ACCOUNTS EQUALLY FOR GHANA AND THE WHOLE WORLD. DELAYS IN THE FIGHT CAN THEN ALSO HAVE AN INFLUENCE ON THE GHANA STOCK EXCHANGE.

THEREFORE, WE SEE THAT GHANA STOCK EXCHANGE WEEK FROM         16-03-20 TO 20-03-20 DOES NOT SEE ANY SIGNIFICANT CHANGE TO THE WORSE. BUT WE MUST WAIT WHETHER THE CORONA VIRUS WILL HAVE A STRONG INFLUENCE ON GHANA’S FINANCIAL MARKETS.

FOR FURTHER DEVELOPMENT, STAY TUNED!

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