Rising interest rates affect GSE stocks

Economic pressures continue to hammer Ghana with the exchange rate closing at GH¢2.77 to the US dollar on Thursday April 17 versus GH¢2.16 to the US dollar, a 36 percent fall in value over the 18 slippage against the United States dollar, at the end of March.
The falling local currency will spike inflation and lead to investors demanding more compensation in higher interest rates on local money, as a result, the 3 months Treasury Bill rate for the April 11 auction rose to 24.06 percent up from 23.69 percent at the end of March and 18.5 percent at the end of December last year. Rising interest rates, result in falling stock prices as investors switch to what they see as instruments of higher returns. This has happened in Ghana, with stock prices that rose sharply up to the week ending February 21, falling ever since. This past week, the market lost 3%, based on the Ghana Stock Exchange Composite Index, to close at 2,272.40 points and the Ghana Stock Exchange Financial index, lost 4% to close at 1,934.75 points. At the end of the previous week, the indices recorded a decline of 2 percent and 3 percent respectively. The market at the peak this year, recorded gains of 21 percent for the financial index of the Ghana Stock exchange, while the market’s composite index was up, just under 13 percent, by the February 21. On Thursday, the year to date gains melted to just 5.93 for the composite index and 8.29 percent for the financial index.
In the past trading week ending Thursday April 17, the Ghana Stock market decline was fuelled by an advanced, decline ratio of just one stock recording gain, versus 13 stocks that fell, a much worse situation than the previous week, of 5 stocks gaining compared to 8 declining and the week of April 4, when 8 stocks fell to 7 that increased in price.
Trading for the four day week, accounted for 5,783,737 shares compared to 2,571,333 the week before. Of the amount traded this past week, 4,696,499 was traded on Tuesday and only 352,288 on Thursday.