A stock analyst on Thursday predicted that share prices on the Ghana Stock Exchange (GSE) would continue to rally for good end-of-year results if nothing happens to throw the current macro-economic situation out of order.

The optimism of Mr Daniel Ogbarmey Tetteh of Data Bank follows a series of gains in the stock index, mainly led by Ghana Commercial Bank (GCB).

The GSE index which ended last year at 958.89 points closed on Wednesday at 1,172.32 points. Change for the year, which was about 11 per cent for the whole of last year closed at 22.63 per cent on Wednesday.

Speaking to the GNA in Accra, Mr Tetteh said the recent gains in the market index were due to the market being "generally cheap", meaning the Price Earning Ratio (PE Ratio) of the stocks is low.

Low PE ratio determines the period within which or the number of times an investor makes capital gains on money invested.

He said another indicator of what a cheap market means refers to the number of years an investor needs to wait to recover his investment in a stock.

Of the 23 listed equities, CFAO has the lowest PE ratio of two. GCB, British America Tobacco Company (BAT), Mechanical Lloyd Company (MLC), Standard Chartered Bank (SCB), SSB Bank Limited (SSB) and Unilever Ghana Limited (UNIL) follow with PE ratio of three.

Mr Tetteh said the low ratios combined with the macro economic situation have influenced investors to take a serious look at the market.

He said since the beginning of the year, a number of stocks had posted interesting returns and were expected to produce better results to push the rally in the share prices of the other equities.

Since the beginning of the year, MLC has recorded 74 per cent in returns followed by GCB with 64 per cent and SSB Bank with 59 per cent.

The average PE ratio for all the stocks stood at 3.8, Mr Tetteh said, and added that some listed companies had released impressive highlights of first quarter results, which had gone to influence interest in the stocks to push prices up.

Mr Tetteh said the renewed interest in the Ghanaian market was a mixture of both foreign and local investors.

"Basically, foreign investors dominated the market but at least we know that some local institutional investors and a few individuals have patronised the stocks due to apparent stability in the cedi and new confidence in the market."

Mr Tetteh said investors were now beginning to move back to the Stock Exchange from treasury bills.

He also noted that dividend yields for most of the equities were not exactly poor because of the potential to produce better results to further push the price up.

Mr Tetteh reiterated the need for government to ensure that nothing happened to throw the stable macroeconomic environment out of gear.