Stockbroker and investment bank Exotix Limited (www.exotix.co.uk) says the Ghana Stock Exchange’s All-Share Index has so far been the world’s worst performer in 2009, falling 49% after being among world beaters in 2008 with a 58% gain.
London-based Exotix analyst Christopher Hartland-Peel says the index is likely to climb 25% to 30% in 2010 as the west African nation starts producing oil for export, according to Bloomberg.
“We view Ghana as one of the countries that are going to be among the strongest growing” in Africa, Bloomberg quotes Hartland-Peel. “The reason for this is oil.”
GSE share prices plummeted as international investors fled assets perceived as risky during the height of the global credit crisis, and 15% depreciation in the currency (cedi) triggered 20% inflation and a $1 billion rescue by the International Monetary Fund.
Ghana’s Jubilee oil field was discovered in 2007 and is scheduled to start production in the fourth quarter of 2010. Tullow Oil Plc, which owns a 34.7% stake, says the field may hold as much as 1.8 billion barrels of oil, with initial production estimated at 120,000 barrels a day. The firm adds that Ghana will be one of the world’s top 50 oil producers.
Currency depreciation and consumer price inflation helped double yields on Ghana’s 91-day Treasury bills compared to a year earlier, reaching 24.7% before declining slightly. Hartland-Peel says stocks won’t rebound until an economic recovery reduces bond yields: “If you can get 23%-24% in Treasury bills, why put your money in the stock market?”
The central bank in November cut its key lending rate for the first time in nearly three years by 50 basis points to 18%. Further cuts may follow after consumer inflation fell for the fifth straight month to 16.9% in November.
Finance Minister Kwabena Duffuor reportedly said the budget deficit will fall to about 10.2% in 2009 and 7.5% in 2010, from the 2008 peak of 24.2%. Economic growth will likely reach 5.9% in 2009 and 6.5% in 2010, after 7.3% in 2008.
The cedi has gained nearly 5% against the dollar since the International Monetary Fund agreed in July to lend Ghana $1.02 billion over 3 years. Stocks may also benefit from 1 bln. cedis set to be invested in Ghana’s securities markets through a government pension-reform programme starting next year, allowing private brokers to develop and manage corporate retirement plans.