GSE Council Chairman urges govt to support automation

Accra Oct. 30, GNA - Mr Jude Kofi Bucknor, Chairman of the Council of the Ghana Stock Exchange (GSE), on Thursday reiterated the call on the government to support the automation of activities of the Exchange to speed up its clearing and settlement system.

This is expected to make the GSE, which earned the title the Star of Africa in the latter part of the 1990s to become more efficient, transparent and competitive.

He said: "We cannot hope to run a modern stock exchange based on a manual trading and settlement system when the countries around us have automated theirs."

Mr Bucknor was speaking at the 13th Annual General Meeting of the GSE in Accra, which among other things approved new memberships, admission fees and annual subscriptions.

He said so far, the Bank of Ghana had spearheaded efforts to establish an automated clearing and settlement system and a National Depository for Government instruments, equities and corporate bonds. At the moment, the Exchange has managed to reduce on trial basis, its settlement period for trading in shares from the trading day (T) plus five days to the trading day plus three days.

Mr Bucknor noted that the GSE in the year under review, year 2002, managed to attract more companies including the Trust Bank Limited of the Gambia to list on it.

He, however, appealed to the Government to divest strong State Owned Enterprises (SOEs) and raise the needed capital for expansion and investment programmes through the Exchange.

Mr Bucknor said this call followed the realisation that recent divestitures of the Government's share in Barclays Bank and Coca Cola were not fully carried out through the Stock Exchange.

"The market needs such divestiture and local investors are definitely interested," he said.

The Chairman also urged the Ghanaian investor-community, managers of pension funds, saving schemes and other holders of capital to patronise shares listed on the Bourse since they formed one of the most attractive avenues to safeguard and enhance the value of their investments.

On the performance of the Bourse for the year under review, Mr Bucknor said the general economic environment had shown encouraging signs of stability and progress from 2002 to 2003, despite the difficulties encountered.

He said inflation at the end of 2002 was 15 per cent, but it rose sharply in early 2003 to approximately 30 per cent.

Inflation has declined, albeit slowly, to about 27 per cent, he observed, and expressed the hope that the downward trend would continue. Interest on Treasury Bills, which reacts to inflationary trends, declined from 40.8 per cent to 25.1 per cent in 2002 and shot to a high of 35.81 per cent in July 2003. It has since been coming down. At the end of September the rate was 25.94 per cent.

The cedi depreciated against the dollar by 13.2 per cent in 2002 but has been much more stable with a declining rate of about four per cent in 2003.

Mr Bucknor noted that the effects of these on the activities of the Stock Market in 2002 were, however, impressive.

The GSE All-share Index, which is the main market gauge and indicates the average performance of the Bourse, rose by 46 per cent against 11 per cent for 2001.

The Council Chairman said a total of 44 million shares valued at 89 billion cedis were traded, compared to 55 million shares valued at 92 billion cedis in 2001.

Market capitalization went up from 3,904 billion cedis in January 2002 to 6,184 billion at the end of December 2002 indicating an increase of 58 per cent.

The Chairman said following the achievement recorded in 2002, the Bourse had witnessed significant gains in the level of market activities and prices in 2003.

He said: "Trading has been active and bullish, making our market one of the best in the most impressive performers in the world." The All-Share Index has to date risen by 106 per cent by October. Volume of shares and values traded for the nine months to September 2003 are pegged at 65 million shares valued at 320 billion cedis. Mr Bucknor said the Exchange had introduced new comprehensive securities course modules to replace the old ones.

The new courses cover areas in corporate finance, investment analysis and portfolio management and have received tremendous patronage.

He said the various promotional activities carried out by the Exchange had resulted in increased investor interest and encouraged listings by small companies.

There is growing interest by a number of companies to list on the Bourse due to the provisional and fast track listing programme introduced recently, Mr Bucknor said, and urged the media to help create awareness among Ghanaians to invest in the capital market. 30 Oct. 03