GSE rally set to continue on back of lower T-bill yields, strong banking industry performance

The Ghana Stock Exchange’s (GSE) equity marketplace is poised to widen its bullish tally done the 2nd 4th of 2025 arsenic little Treasury measure (T-bill) yields, a unchangeable macroeconomic environment, and improved firm net – peculiarly from the banking assemblage – proceed to spur capitalist confidence.

This is according to Databank Research’s latest Ghana Market Quarterly Report for Q1 2025, which projects sustained marketplace momentum anchored by favourable monetary dynamics and coagulated sector-specific fundamentals.

“Ghana’s equity marketplace is expected to proceed its rally done Q2-2025, buoyed by the ongoing macroeconomic recovery, upbeat capitalist sentiment and improved firm earnings,” Databank stated successful its report.

GSE’s Composite Index (GSE-CI) – which reflects wide marketplace show – is projected to scope 6,850 points by the extremity of 2025, translating to a instrumentality of betwixt 40 percent and 50 percent.

“The banal marketplace rally is expected to proceed done Q2 ’25 connected relationship of favourable firm net amid betterment successful economical activity. Given these affirmative backdrops, we reiterate our anticipation of the GSE-CI closing astir 6,850 points by the extremity of 2025 – translating to 45%±500bps,” a information of the study read.

At the bosom of the rally is simply a notable diminution successful yields connected short-term authorities securities, which is prompting a reallocation of superior from fixed income to equities. T-bill yields, which reached highs of implicit 30 percent successful 2023 amid inflationary pressures, are present projected to mean betwixt 15 and 16.5 percent successful the 2nd 4th of 2025.

This displacement analysts person attributed to improving macroeconomic stableness and renewed assurance successful government’s fiscal consolidation efforts.

In archetypal 4th of the year, yields connected wealth marketplace instruments deed 3-year lows with the 91-day measure dropping by 12.33 percent points (pps) to 15.71 percent . Similarly, the 182-day measure recorded an 11.95pps diminution to 16.73 percent portion the 364-day measure settled astatine 18.65 percent, an 11.23pps decrease.

T-bill capitalist involvement declined past week, with full bids decreasing by 27 percent week-over-week to GH¢5.29billion. The Treasury accepted GH¢4.73billion, which fell abbreviated of some the GH¢6.09billion successful maturing bills and GH¢6.32billion people – resulting successful sum ratios of 0.77x and 0.74x respectively.

Yields decreased crossed each tenors, with the 91-day measure dropping by 9 ground points to 15.23 percent, 182-day measure falling by 26 ground points to 15.77 percent and 364-day measure decreasing importantly by 142 ground points week-over-week to 16.96 percent.

“The expected diminution successful yields connected GoG section currency instruments is underpinned by improving capitalist sentiment and macroeconomic fundamentals,” the study stated, citing gradual easing of monetary argumentation and anticipated inflows from the International Monetary Fund (IMF) arsenic contributing factors.

The federation is expected to person a US$370million disbursement from the IMF successful the 2nd 4th nether the ongoing Extended Credit Facility (ECF) programme.

Meanwhile, the banking assemblage has emerged arsenic a cardinal operator of banal marketplace gains – registering a 29 percent summation successful Q1 2025, the sector’s strongest quarterly show successful 7 years.

The rally has been fuelled by robust net reports, renewed dividend payouts pursuing regulatory clearance and improving plus prime arsenic banks accommodate to post-DDEP (Domestic Debt Exchange Programme) realities.

“The banking sector’s beardown show is attributable to net strength, resumed dividend payments and improved capitalist confidence,” Databank noted. The reinstatement of dividend payments, successful particular, has re-energised retail and organization capitalist information connected the bourse.

During the archetypal 4th of 2025 GSE’s Composite Index (GSE-CI) concluded astatine 6,217.90 points, expanding from 4,888.53 points astatine opening of the twelvemonth – which represents a 27.2 percent gain. In a parallel inclination the Financial Stocks Index (GSE-FSI) precocious from 2,380.79 to 3,059.30 points, delivering a 28.5 percent instrumentality implicit the aforesaid period.

Nonetheless, concerns stay implicit the industry’s comparatively precocious non-performing indebtedness ratios and debased superior adequacy ratio. The erstwhile is presently astatine 21.8 percent and the second astatine 14 percent.

Databank besides highlighted a acceptable of equities poised to outperform successful the near-term, driven by company-specific and sectoral tailwinds. These see vigor steadfast Total, which is expected to payment from accrued concern and mining activity; Unilever, connected relationship of operational improvements and renewed marketplace strategy; Bopp, supported by beardown crude thenar lipid (CPO) prices and accordant dividend policy; and Guinness, riding connected terms increases and strategical repositioning.

Guinness’s performance, successful particular, reflects a broader inclination of resilience among consumer-facing companies navigating currency depreciation and outgo pressures.

“GGBL’s awesome 9M-2024 results, powered by terms increases, bespeak the net momentum volition beryllium sustained successful 2025,” the study said.

The broader macroeconomic situation is besides expected to stay supportive of equity marketplace gains. Real Gross Domestic Growth (GDP) maturation for Q1 2025 is estimated astatine 4.2 percent, up from 3.6 percent successful the erstwhile 4th with the 2nd 4th forecasted to turn betwixt 4.6 percent and 6.6 percent.

The services and manufacture sectors are projected to pb this expansion, contempt immoderate seasonal moderation successful agriculture.

Monetary argumentation is expected to clasp dependable successful the near-term, with the Bank of Ghana apt to support the argumentation complaint astatine 28 percent barring immoderate crisp inflationary surprises. The cedi is besides expected to stay comparatively stable, trading wrong a constrictive set of betwixt GH¢16 and GH¢16.2 to a U.S. dollar – supported by BoG interventions and the Gold for Reserves and Gold for Oil programmes.

“While marketplace outlook is positive, the gait of output compression whitethorn beryllium tempered by still-elevated Open Market Operations (OMO) rates and the persistence of antagonistic existent returns,” the study cautioned. This highlights the request for continued argumentation subject and structural reforms to support capitalist interest.

Global factors could besides present volatility. Uncertainty stemming from geopolitical tensions, commodity terms fluctuations and the evolving involvement complaint stance of large cardinal slope – peculiarly the U.S. Federal Reserve – could power marketplace sentiment successful emerging economies similar Ghana.

Nonetheless, Databank remains assured successful GSE’s show trajectory for 2025. “We expect the marketplace to proceed its rally done Q2-2025 arsenic the existent macro backdrop, supported by fiscal consolidation and planetary fiscal assistance, remains broadly conducive to hazard plus performance,” the study added.