The concept ‘financial market and COVID-19’ has been widely used and debated differently by different people, including investors, government officials and the general public.

It’s not a new concept, but the upsurge of the debate on financial markets has made the concept seemingly new – especially in a developing country like Ghana, where the sector has undergone a challenging period in recent years and generated a lot of debate within the public domain.

Historically, the Ghana Stock Exchange was set up to provide facilities and a framework to the public for the purchase and sale of bonds, shares and other securities, as well as co-coordinating the stock-dealing activities of members and facilitate the exchange of information – including prices of securities listed – for their mutual advantage and for the benefit of their clients.

Over the past few decades, company’s valuation and market capitalisation for the firms listed on the Ghana Stock Exchange have been experiencing dynamic changes. This movement of stock prices makes investors sceptical about the future performance of companies.

As a result, the stock prices may drop in the short run as well as the long run. In assuring that the investors are in a comfort zone about the fluctuation of stock prices, these investors need to know the causes and extent of such influences in the economy.

The COVID-19 shock is seen to be severe compared to the financial crisis in 2007/2008. However, the impact of this pandemic on the Stock Market of Ghana has not been researched. Different International Organisations and Economics Experts have warned that the recent pandemic will have serious impacts on the global economy, and perhaps the impacts will surpass the Global Financial crisis.

The World Economic Forum 2020 report asserted that the corona virus shock is more severe when compared to the 2007/2008 global financial crisis.

However, reports have indicated that China’s Stock market remains strong and stable regardless of the current pandemic. According to Xinhuan (2020), China’s financial market remains generally stable compared to other markets outside China, despite the spread of COVID-19.

Our COVID-19 Economic Impact Assessments provide analysis of the pandemic’s influence on stock prices, stock market indexes and the investment environment from 1st March 2020 to 30th June 2020 in Ghana.

The GSE composite index (GSE-CI) provides a performance overview for the entire listed stocks on the Ghana Stock Exchange, whereas the GSE Financial Stock Index (GSE-FSI) provides a performance overview of financial institutions’ listed stocks. These indexes basically provide a guide to investors in their decision-making with regard to purchasing stocks on the stock market.

Data from the Ghana Stock Exchange from February 2020 to June 2020 revealed that the stock prices have been declining.

For instance, the year to date return of the GSE Composite Index (GSE-CI) declined from -2.01% in February 2020 to -15.83% in June 2020. Similarly, the year to date return of the GSE Financial Stock Index (GSE-FSI) also declined – from -2.73% to -14.59% during the same period (figure 1.3).

It can also be seen from figures 1.1 and 1.2 that stock prices of most financial and non-financial institutions have been declining, with prices of few stocks being relatively stable for the past four months.

One can say that investors are selling their stocks in recent months due to the COVID-19 pandemic. Factors such as job-losses, reduction in salaries of most employees, decline in sales of most businesses, as well as the slowdown in general economic activities of the country have had negative impacts on income levels.

This development has compelled most investors to sell their stocks in order to raise the needed money for their daily upkeep. Besides, investors are most concerned about the uncertainties that are arising from the pandemic; hence, they are being extra-careful with regard to where they will put their funds.

With this, most investors are now investing in short-term fixed income securities such as government of Ghana Treasury bills and cocoa bills at the expense of long-term securities such as stocks – and this development is having a negative impact on stock prices.

For instance, data from the Ghana Fixed Income Market (GFIM) show that investments in fixed income securities grew by a monthly average of 9.73% from February 2020 to June 2020.

To sum it up, policy reactions to contain the virus and level the stock markets are needed; countries are not working together to cope with these challenges, as the Ghana Stock Market is responding differently to international-level policies and the general development of the pandemic. Ultimately, this tendency toward disintegration in the global community is more of a threat than the virus.

Additionally, granting stimulus packages in the form of loans at a lower interest rate to businesses by government in response to the coronavirus pandemic cannot be underestimated.

This will boost economic activities, create jobs, and increase the income levels of businesses and individuals – which will then increase spending and also boost investors’ confidence to invest in long-term securities such as stocks.