Accra (Greater Accra), 11 Jan. '99 -
Mr Yeboa Amoa, Managing Director of the Ghana Stock Exchange (GSE), today described the performance of the local bourse in the past year as "satisfactory", saying: ''it was one of the best among emerging markets globally".
He noted that the stock market in 1998 saw prices of listed securities increase by nearly 70 per cent in cedi terms, adding that this will be hard to beat among emerging markets.
Mr Amoa made these remarks in an interview with the Ghana News Agency in Accra today.
Commenting on his impressions and analysis of the Exchange in the past year as well as prospects of growth in the new year, Mr Amoa said the market's appreciation was a significant rise above the 41 per cent rise in 1997 or 13 per cent rise in 1996.
He said, taking the two consecutive years together, the market had recorded average rise in excess of 110 per cent cumulatively. "Given this stellar performance, investors would be making a mistake if they did not invest in listed securities. The best place to invest your money is on the stock exchange, not in other financial assets, not in foreign currencies."
Mr Amoa said 12 listed companies registered gains in percentage terms that exceeded the treasury bill rate of 27.5 per cent.
These are Home Finance Company Limited (219.1 per cent), Standard Chartered Bank (196.3 per cent), PZ Ghana (176.9 per cent), Enterprise Insurance Company (151.6 per cent), Pioneer Aluminium Factory (123.5 per cent), Fan Milk Limited (125.4 per cent), Mobil Oil Ghana Limited (106.6 per cent) and Ghana Commercial Bank ( 62.5 per cent).
The rest are Super Paper Products Company (58.9 per cent), Unilever Ghana Limited (45.5 per cent), Social Security Bank (32.4 per cent), and CFAO (31.6 per cent).
Mr Amoa said even though there was a decrease in the total volume of shares traded this year from about 126 billion to about 91.5 billion, the value of total shares traded increased substantially from the 93 billion cedis made in 1997 to 134 billion cedis in 1998.
"This shows that share prices over the years have been on the increase and have gone up far above their initial offer prices. In other words, investors have had value for their money."
Overall number of shares traded since trading began in November, 1990, to December, 1998, is estimated at about 443.739 million with a market value of 359 billion cedis.
On what the future holds for the Exchange within the national economy, Mr Amoa noted that the fact that managers of the economy have contained the depreciation of the cedi is a positive sign since it takes away one source of pressure on inflation.
The reduction of inflation and interest rates over the past year should impact positively on the Exchange and the economy in general and the healthy competition among the banks will add to the accelerated reduction of the interest rates.
Mr Amoa said the recent empanelling of the Securities Regulatory Commission (SRC) is a positive mark on the operations of the Exchange. "This will provide leadership and direction to the market and inspire greater confidence in the market among investors." Mr Amoa said the peaceful atmosphere that has prevailed is a source of goodwill for greater confidence and has generated interest within the international investing community.
"It has generated considerable praise for, as well as goodwill and interest in Ghana. These peace dividends must be fully exploited".
Mr Amoa said this is important because foreign direct as well as
portfolio investments are crucial for Ghana's economic development.
He expressed the hope that, with the expected stabilisation of foreign
exchange rates, entrepreneurs would be more encouraged to use the capital market
in raising capital for investment instead of staying on the sidelines.
Mr Amoa also spoke about some anticipated challenges, saying: "the delay
of the rains and the drought in the first half of 1998 could lead to some
shortfalls in the food situation."
He, therefore, called for steps to address this well in advance.
Mr Amoa said that in a year before general elections, there is bound to
be some pressures on government such as demand for more pay.
The introduction of the Value Added Tax (VAT) and increase in utility
tariffs rates could be pretext for high wage demands.
"In the context of the foregoing, the achievement of single digit
inflation rate in 1999 could be a great challenge. While the Exchange is still
rated as one of the best among emerging markets world-wide, the coming into
force of a Regional Stock Exchange in the CFA Franc Zone imposes challenges on
the Anglophone nations."
Seven French-speaking countries in the sub-region established a Regional
Stock Exchange recently which, Mr Amoa said, has made the Ghanaian market
smaller.
"The solution is a more aggressive and effective market by the exchange.
It is to counteract this situation that we are signing agreements with other
stock exchanges. We did this with Nigeria last year with a memorandum of
understanding and hope to link up with others soon".
Mr Amoa called for closer co-operation and even integration of exchanges
on the Anglophone side but cautioned that these must be done after careful
harmonisation and considerable groundwork involving the stock exchanges
themselves and the governments of the countries involved.
The GSE boss lauded the on-going efforts by government towards the
establishment of the Privatisation Trust to warehouse shares of State-Owned
Enterprises (SOE's) for eventual sale to the investing public, employees and
other persons and expressed the hope that the Trust
would enhance patronage of the Stock Exchange.
Mr Amoa said the World Bank was supporting the Exchange to undertake a
number of projects which would boost its efficiency, image and standing among
the international finance community.
These projects include the installation of automated trading, clearing,
settlement facilities and depository; upgrading of professional skills and
standards and a project to strengthen links between the GSE and other selected
stock exchanges.
On the impact of VAT on the market, he said it is a plus for the
economy, especially since it will lead to a widening of the tax net beyond
salaried employees in and outside major companies by taxing consumption in
selected areas.
