Equity market: Since trading commenced, returns on the market have been largely positive


The restructuring of the financial sector resulted in the creation of the financial market in Ghana. The market is made up of equity, bond, foreign exchange and derivative markets, with the money market dominating the financial markets.

Equities Market

The Ghana Stock Exchange (GSE) is the result of a private initiative that has been supported by the government. In 1990 the market had 11 securities worth GHS3.1m ($800,000), but now boasts 40 equities with a total capitalisation of GHS62bn ($16bn). Companies have raised more than GHS2.1bn ($542m) in equity and GHS194m ($50.1m) in debt securities as of 2015. There were also 14 corporate debts valued at GHS97m ($25m) and 98 government notes and bonds valued at GHS11.1bn ($2.9bn). There were two sovereign bonds of $3bn and several listed corporate and government Treasury bills worth GHS18bn ($4.6bn). The GSE is a market for all financial instruments. The market has three segments: the main equity board, the Ghana Alternative Market (GAX) for small and medium-sized enterprises and the Ghana Fixed Income Market.

In terms of market liquidity, the equities market has contributed significantly to an efficient capital market in the country. In 1991, 1.83m shares were traded. This figure increased to 297.7m shares in 2015 with a value of GHS347.6m ($89.7m). There are currently more than 88,800 registered investors with equity accounts in the Central Securities Depository. The volume of shares traded rose by 43.5% in 2015, resulting in a marginal increase of 0.49% in the value of shares traded compared to 2014.

Returns To Investors

From 1995 to 2014 the equities market, on a compound basis, returned 5400% to investors compared to a 2900% return on dollar investment and return based on inflation of 3100%. From 2010 to 2014, on a compound basis, the market returned 199% to investors, compared to the same dollar investment of 124% and return based on inflation of 70% and also return on 91-day bills of 126%. Historically, the market has seen more positive returns than negative returns. In 21 out of the first 25 years of existence, the index return has been positive. In 2013 the GSE was proclaimed the best emerging market with a return of 78%. In 2015 the market returned -11.77%, and the financial services sector returned -13.98%. The equity that returned most to investors in terms of capital appreciation in 2015 was Aluworks (600%) followed by Starwin Products (100%), Trust Bank (54%), Fan Milk (40%) and Enterprise Group (37%). The worst performers were Golden Web Resources (-67%), State Insurance Company (-62%), UT Bank (-60%), HFC Bank (-40%) and Guinness Ghana Breweries (-38%).

Equity listings included Samba Foods, Meridian-Marshalls Holdings Company (MMH), Hords and afb Ghana on the GAX. The market also saw the listing of Izwe Loans corporate bond. The company listed its GHS80m ($20.6m) medium-term note programme on the GAX in November 2014, and a total of four initial tranches of GHS38.6m ($10m) were listed. Samba Foods listed in February 2015 and offered close to 3.48m shares to raise GHS2.5m ($645,000), while MMH issued 25m shares to raise GHS2.5m ($645,000). Hords issued 80m ordinary shares on the GAX to raise GHS4m ($1m), while afb Ghana issued a corporate bond to raise GHS57m ($14.7m).

A Cycle

In 2015 the performance of equities listed on the market was unimpressive, and activity is yet to pick up. The main equities market goes through three-year cycles, with the current phase ending in 2016. Towards the end of the period, the market’s returns are not impressive, since most equity prices fall and become under-priced. In 2016 it is expected that most of the equities will continue to experience price reduction, and by the end of the first quarter of 2017 the market will see a lot of trading activity which may lead to increases in prices and better returns.