Business News of 2014-01-21

Big returns for investors on GSE

Equities listed on the Ghana Stock Exchange (GSE) returned about 79 per cent at the end of the year 2013, making the exchange the second best performing stock market in Africa and one of the best globally.

The achievement means that investors in stocks on the market returned an average of 79 per cent on their investments, which was far better than what they would have earned should they have locked their money in any other investment in the country in the period under review.

While the 91-day Treasury bill returned an average of 22 per cent per annum, returns from fixed deposit accounts with the banks hovered around a maximum of about 10 per cent.

The performance of the GSE is more than three times what was recorded in the same period in 2012 as the composite index returned just about 24 per cent.

At a news conference in Accra to announce the performance of the GSE, the Managing Director, Mr Kofi Yamoah, explained that the stocks on the market have been divided into two indices, the Financial Stock Index (FSI) and the Composite Index (CI).

For the FSI, he said that returned 72 per cent in the year under review, as against 20 per cent in 2012.

“There is a bit of correlation between the FSI and the CI because there are quite a number of the securities listed which are in the core group of the financials, that is, the insurance companies, so when they tend to do very well as you see in the index for the financials, then it tends to push the CI significantly up and that is what we saw in 2013,” he said.

First of all, the Composite Index (CI) attracts all the listed securities and then the Financial Stock Index (FSI) attracts only the financial securities, that is, the banks and insurance companies.

In dollar terms, he said the CI returned approximately 55.5 per cent as indicated in the performance.

Market capitalisation

The total market capitalisation of the GSE rose from GH¢57 billion 2012 to GH¢61 billion.

However, in domestic terms, domestic capitalisation inched from GH¢6.62 billion in 2012 to as high as GH¢11.7 billion in 2013.

Two criteria are used in computing the market capitalisation of the GSE.

The first is the total market capitalisation which tracks all the securities that are listed on the market, including companies that have their primary listings outside but have secondary listings in Ghana here.

These companies include the likes of Tullow, Golden Star Resources, Ecobank Transnational Incorporated and AngloGold Ashanti, among others.

The second category is the domestic capitalisation. This one attracts only companies that have their primary listings in Ghana here and nowhere else.

“It is, therefore, clear that the CI gain was largely driven by companies that have their primary listings in Ghana here, and not the likes of AngloGold or Tullow and that, for us, is a heartwarming news because the ultimate goal for the exchange is to drive companies that are incorporated here, have their primary listings here, raise capital and grow and so forth so that they can serve as a lesson and a story for us to tell as far as companies that are yet to be listed are concerned,” he said.

Volume of trade

A total of 313 million shares, valued at GH¢465 million were traded on the exchange in 2013, as compared to 218 million shares in 2012 which was valued at GH¢102 million.

The rise in the volume of shares traded was on the back of the continued participation of the 2nd tier pension funds and on what Mr Yamoah described as the “excellent performance of listed companies”.

Against this background, he was hopeful that in “2014 and beyond, we will continue to make that particular figure that impressive”.

Listed equities

There was no change in the number of listed companies, as the number remained the same at 37 at the end of 2013.

Of the number, Mr Yamoah said “28 equities traded in the course of 2013, and explained that “in order words, every security does not trade everyday. In the year under review, we tracked the number of companies that actually traded shares and we had 28, as compared to 32 in the corresponding year 2012.”

He was, however, optimistic that the figure in terms of the number of listed companies on the exchange will rise beyond the 37 by the close of the year.

Way forward

Meanwhile, for investors to be able to realise the gains made on their equities, they need to sell all or part of it for cash.

Source: Graphic Business
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