Ghana Stocks May Gain 25% This Year as Economy Grows: Databank

Ghana (Capital Markets in Africa) – Ghana stocks will benefit from estimated 7.8% GDP growth this year, according to Alex Boahen, head of research at the country’s second-biggest private fund manager.

• Nation’s crude production and expected increase in bank credit growth to businesses and households will drive GDP growth
• Banks’ lending will be stronger after government began selling bonds last year to clear energy-sector debt on their balance sheets and with the central bank seen cutting rates further this year
  • NOTE: Nov. 7, Ghana Misses $816 Million Bond Target After Extended Bidding (1)
• Databank sees stronger GDP growth compared with government’s 6.8% target as it estimates crude production at about 66m barrels, higher than the government’s 59m barrels; oil prices at $70/barrel vs target of $54.44/barrel, Boahen says in an interview in the capital, Accra
• Companies will be spurred by stronger discretionary spending from consumers; cedi will be stable and could end year at 4.58/$
• While the Fed’s potential interest-rate increases will lend some strength to the dollar, that will be countered by stronger Ghana revenue from higher crude prices, expected sustained inflows from portfolio investors into bonds and positive trade balance in 2018
• Ghanaian stock market seen remaining competitive among African peers on the back of stable currency, forecast of single-digit inflation by end-December from 11.8% in December 2017
• Ghana’s food inflation to be suppressed by a food growing program that started last year, dubbed “planting for food and jobs”
• Financial stocks including GCB, CAL Bank and Societe Generale Ghana seen leading gains; Ghana Oil, Total Petroleum Ghana, Guinness Ghana and Fan Milk also expected to be among top performers
• Index gains may struggle to match the 53% advance recorded in 2017 “owing to the risk of profit taking after a good year and high capitalized stocks like Standard Chartered Bank and Ecobank already approaching their fair values”