Bourse Holds Out Against Hard Economic Conditions

ACCRA, Ghana (PANA) - The head of the Securities Discount Company, Fred Nuer, has said that the Ghana Stock Exchange (GSE) performed better in the first six months of this year in spite of negative developments in the economy.

He said although the gains were marginal compared to the corresponding period of 1999, it was because the odds against trading activities on the bourse were heavy.

Nuer was speaking to the Ghana News Agency in Accra Wednesday on the performance of the Exchange.

Total traded volumes during January-June went up to 18.8 million, compared with 18.03 million during the same period in 1999.

In cedi terms the market recorded 28.2 billion as against 26.03 billion in the corresponding period of 1999 [4,908 = 1 USD].

Nuer said a major factor that had impacted negatively on the performance of the bourse was the depreciation of the cedi.

This has eroded foreign investors' confidence in the activities on the bourse since most of them were making negative returns on their investments.

"Most of the foreign investors' have actually lost half their investments due to the depreciation of the cedi."

He said the absence of foreign investors has had adverse effects on trading activities on the bourse, adding that "they were the dominant force in the market since local demand has been very low."

He said the inability of the local investing public to participate fully in the activities on the bourse was due to the economic hardship most of them are going through now.

"In times of hardship, individuals prefer holding their money than investing it."

Nuer said local institutions have also failed to invest because they see the risk-free Treasury Bill market as more attractive than investing in equities.

Treasury bills now attract about 45 percent.

Commenting on the idea of a regional stock exchange, Nuer said it is a laudable since it would offer investors numerous investment opportunities to explore.

He, however, noted that for the idea of a regional bourse to succeed, various structural reforms were needed in the economies of countries in the sub-region.

Meanwhile, the key market indices of the GSE were unchanged at mid-week for the second time in as many trading sessions as the downturn in the fortunes of the bourse continues.

The All-share index, the major market indicator, was static at 816.71 points.

Trading was heavily dominated by bearish sentiments and there was no gain in the share price of any of the 23 listed equities.

There was negative pressure on 18 equities while the remaining five registered no pressure at all.

Trading was low-key with only five equities selling 26,100 shares, up from 10,100 at the previous session on Monday.

Market capitalisation was still at 3,564.37 billion cedis while the change for the year to date was static at 10.94 percent.

Total shares offered dropped from 2.2 million to 1.8 million while bids equally fell from 93,500 to a low of 32,100.