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04.11.2005 Business & Finance

GSE - One of the worst in Africa?

By Ghanaian Chronicle
GSE - One of the worst in Africa?
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... moves from first to 16th position in 1 year The one time best stock exchange performer from the developing world, the Ghana Stock Exchange (GSE) is now one of the worst in Africa.

Although, the Ghana Stock Exchange (GSE) has performed well over the last few years, especially from 2000 to 2004, the 2005 performance had been bearish, moving to the bottom.

With market capitalization of about ¢92,192.88billion as at Wednesday, the Ghanaian bourse moved from the first position just last year to the sixteenth position in September.

Egypt is currently in the first position with about 130% return on investment.

Ghana is in the sixteenth position with about negative 27% return in the All-Share index just below Swaziland.

Speaking at a development dialogue on the theme "Trends in the capital market", the Acting Director of the Securities and Exchange Commission (SEC), Dr. Nii Kwaku Sowa, said an active capital market has a positive effect on the national economy and growth usually comes through increased investments.

He said companies need more finance to increase their investment, thus, the more capital is available, the greater the likelihood of an increased output.

On the development of the market, the Ag. Director said one of the building blocks for capital markets was mass public involvement and he called on the public to invest into the market to deepen it.

In Ghana, only 0.005% of the population are investing on the GSE while in Malaysia and in the United States of America, 30% and 90% respectively of their population are investing on their stock markets.

Even with the 0.005%, non-resident foreign investors hold 70% of the stocks on the GSE.

He revealed that shares for the multi-national listed firms are hardly available for trading.

Regarding the regulation of the capital market, Dr. Sowa warned players to abide by the rules and regulations or face the full rigours of the law.

The SEC is vested with the power to ensure that there is an orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected.

Dr. Sowa pleaded with the government to privatize State Owned Enterprises (SOEs) through the floating of shares on the GSE, which would lead to the deepening of the market. "Government should collaborate with the SEC to develop the Over the Counter Market (OTC)," adding, "The potential is enormous."

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