• Ghana’s stock market gained nearly 20% since late February, leading globally
• Bank stocks drove the rally, alongside oil-linked gains
• Stronger economic signals boosted confidence, though risks remain

Ghana’s stock market has emerged as the world’s top performer since the outbreak of the Iran conflict, lifted by rising oil prices and renewed interest from foreign investors.

The Ghana Stock Exchange’s composite index climbed nearly 20% in dollar terms from late February before its 41-session winning streak ended on March 19.

Globally, the performance stands out. Of the 92 stock indices tracked by Bloomberg, only twelve posted gains in March. Norway ranked second with a more modest increase of 6.5%.

Banks Lead the Rally

While oil-related stocks benefited from the geopolitical backdrop—Ghana Oil jumped 75% since the start of the conflict—banking stocks have led the surge.

Republic Bank Ghana more than doubled in value, rising 126%, while Standard Chartered Bank Ghana and Ecobank Transnational each gained around 100%.

Fund managers see the rally in financial stocks as a sign that investors are repositioning ahead of a stronger economic recovery. In economies emerging from downturns, financial services typically rebound first, followed by other sectors.

Improving Fundamentals

Ghana, which defaulted on its sovereign debt in 2022, now presents a stronger macroeconomic profile in the eyes of investors.

The central bank cut its benchmark rate for the fifth straight time this week as inflation eased, while warning of potential pressures tied to the Iran conflict. Economic growth also picked up in the fourth quarter, supported in part by a strong services sector.

Risks Still Loom

The rally could prove short-lived if the conflict drags on. Prolonged tensions may trigger inflationary pressures similar to those seen in 2022, squeeze financial sector margins, and make debt repayment more difficult for companies.

Some analysts also caution against over-optimism, pointing to structural risks in frontier markets. Nearly half of the companies listed in Accra have a free float below 20%, limiting liquidity and increasing price volatility.

Nigeria, another oil-producing country in Africa, has also seen its market benefit from the current geopolitical environment.

Fiacre E. Kakpo