From a humble beginning in November 1990, at the second floor of Kingsway Stores Building,the Ghana Stock Exchange has become one of the leading stock markets on the African continent.
The exchange, now located on the fifth and sixth floors of the Cedi House, opened for business with 11 listed companies and three stock broking firms.Today, the exchange can boast of 30 listed companies with 25 government bonds and four corporate bonds.
The exchange is therefore living with its set objectives by providing the necessary facilities to the public for the purchase and sales of shares, stocks and bonds. Not only has the exchange made its mark over the past 14 years in the country, but it has been equally acclaimed as one of the best performing stock exchanges in Africa and the world at large.
The Ghana Bourse with a US dollar return of 144 per cent in 2003, outpaced 61 markets around the world, according to a survey conducted by Databank Financial Services Ltd. The survey further stated that during the two-year period, 2002-2003, the Ghana Bourse led the world with a compounded index return in US dollar terms of 256 per cent.
This is not the first time that the exchange has chalked such a remarkable performance. Even though it is relatively much younger than most of the African Stock Markets, it has gained a lot of attention and interest. In terms of index performance, the exchange was the 6th best performing emerging stock market with a capital appreciation of 116 per cent in 1993.
In 1994, the exchange was once again adjudged the best index performing stock market gaining 124 per cent in its index level.However, the index increased by a little above five per cent in 1995, as a result of macro-economic instability the country experienced.
With its current market capitalisation of some ¢98 trillion, about $10.8 billion, it can be said that the Ghana Stock Exchange has become one of the largest sub-Saharan Stock Exchanges.In the 2004 budget statement to Parliament, the Minister of Finance, Mr Yaw Osafo Maafo, stated that the GSE performed remarkably well and that the basic performance indicators of the market showed positive outturns.
The GSE All Share Index, the main gauge of performance on the exchange, appreciated by 154.70 per cent making it the best performing year to date in the annals of the exchange.It was also among the best performing markets in the world.
Market capitalisation, according to the budget statement, went up by 104 per cent, while market turnover in both volume and valued terms increased by 118.30 per cent and 335.40 per cent respectively.A total of 16 out of the 25 listed stocks at the end of 2003, out performed the effective yield of the benchmarked 91 and 182-day treasury bills.
Of the best performing stocks, 13 recorded capital gains of over 100 per cent at the close of 2003 while three equities recorded remarkable gains in excess of 400 per cent.It was against this background that the government in its wisdom gave a massive tax relief to encourage more listings. For the very first time on the exchange, companies would be granted a tax rebate by having their corporate profile tax charged at 25 per cent instead of the current 32.50 per cent.
The exchange saw Benso Oil Palm Plantation, Clydestone, an Information Technology Company, Cocoa Processing Company and CAL Bank going through the process to be listed. With the exception of Cocoa Processing Company, the other three companies had their offer being over-subscribed.
The shares of Clydestone was over-subscribed by 50 per cent. That of Benso Oil Palm Plantation by over 175 per cent and that of CAL Bank by a whopping 540 per cent. The bank was able to raise ¢290 billion instead of the ¢63 billion it needed to expand its operations as a universal bank.
The 14 years of road shows education and advertisement of the exchange has not been in vain. The over-subscription can also be said to be the level of confidence that both retail and institutional investors have in the market. It would not be surprising that with the high success of the offers of Benso, Clydestone and CAL Bank, the coming years will see a crowd tarmac for IPO take off.
Mr K.S. Yemoah, the Managing Director of the exchange in his address at the listing of CAL Bank, called on companies thinking of listing in 2005 to begin their paper work now.Companies such as National Investment Bank, State Insurance Company, Agricultural Development Bank, Nestle Ghana Ltd,Coca Cola Bottling, the Ghana Airways Corporation,Ghana Telecom as well as Barclays Bank, should seriously think of listing to open up their companies for expansion and growth.
Small and medium companies such as Scancom, Ernest Chemist, Prudential Bank, Unique Insurance Company, Crocodile Machetes Ghana Ltd, Gemini Life Insurance, KAMA Health Services, Star Assurance to mention just a few, should seriously consider the need to expand their operational activities by raising more long term capital for their operational activities.
Listing on the exchange does not necessarily mean that a company is ceding its operations to another. Listing forms part of growth and development of any company. Companies are meant to be matured and developed.
If within four weeks a company can raise over ¢290 billion, then it tells you that the nation has the much needed resources for investment and development. There is still a supply constraint and if efforts are not made to address the situation the resources that companies need to reactivate their operations will not be forthcoming.
It is time that short-term resources for long-term projects gave way for long-term resources. That is the only way development and growth can be put on a sustainable basis.
Despite the fact that the GSE has a market capitalisation in the region of $10.8 billion, it still remains small with a market capitalisation not exceeding 2.5 per cent of Gross Domestic Product, compared with 6.2 per cent in Cote d' Ivoire and 5.2 per cent in Kenya. The future of the exchange is still bright as seen by the International Monetary Fund/International Finance Corporation.
According to the Standard and Poor/IFC Frontier Index, Ghana advanced almost by 40 per cent as a result of soaring cocoa and gold values and a series of initial public offers and rights issues on the Ghana Bourse.
With an electronic trading board, a continuous trading system, more listings of both equity and bonds and the reduction of settlement time from T+10 to T+3, the exchange can be said to be making it gradually to become a fast growing market in the African continent as well as in the global market.