Recovering market: Regulatory reforms to facilitate equity market activity


The equity market experienced reduced performance in recent years, with the Ghana Stock Exchange (GSE) Composite Index returning -0.29% and -10.44% in 2018 and September 2019, respectively. This is down from a high of 52.37% in 2017. Market capitalisation as of end-September 2019 was GHS56.3bn ($10.9bn), down from GHS66.1bn ($12.8bn) one year earlier. The downturn in the equity market can be attributed to rising yields in the fixed-income market and capital flight from foreign investors dumping local securities to take advantage of rate hikes by the US Federal Reserve. Additionally, local retail investors have been selling their stock portfolios to invest in better performing fixed-income assets, selling at takers’ prices, thus significantly affecting share prices and the performance of the bourse as a whole.

In terms of the individual performance of listed shares on the Accra bourse, 30 companies experienced price changes within the first three quarters of 2019. There were six gainers, while the remaining 24 lagged. Notable among the losers was MTN Ghana, which closed at GHS0.69 ($0.13), marking a 12.7% decline; Standard Chartered Bank Ghana, which lost 20.2% to close at GHS16.76 ($3.25); and Ecobank, which fell 43.8% to GHS0.09 ($0.02). Among the other firms that recorded losses were SIC Insurance Company, which declined by 42.1%; Ghana Oil Company (-35.9%); Fan Milk (-36.4%); and Benso Oil Palm Plantation (-41.8%).

Market Highlights 

In August 2019 the International Finance Corporation sold its 14.1% stake in Ecobank, valued at GHS348.7m ($67.5m) to Arise, a private equity firm. This transaction was done on the back of a new regulatory change by the Securities and Exchange Commission (SEC), effecting delivery securities free of payment. The arrangement allows trading parties to settle a locally traded security outside of Ghana and in the currency agreed upon between the two parties. This eliminates the risk of foreign exchange losses in the event that one of the parties is a foreign investor.

That same month the GSE suspended the listing status of the PBC, the country’s largest cocoa purchaser, for failing to publish its financial results for the year ending September 2018, contrary to regulatory requirements, and for failure to redeem its listed notes that matured in December 2018. The overhang of the banking sector clean-up continues to be felt across the broader economy, including in the equity market. For example, in its outlook for the third and fourth quarters of 2019, Unilever Ghana stated that it expects to record a lower turnover compared to 2018, on the back of subdued consumer purchasing power resulting in high inventory levels, as distributors find it increasingly difficult to achieve the desired volume of sales.

In other news, the GSE announced in June 2019 that Equatorial Cross Acquisitions, a management consulting firm and investment holding company, had purchased 25.10% of shares in Ayrton Drugs Manufacturing from Adcock Ingram International. (Zolpidem) This move forms part of the strategy to merge Ayrton Drug Manufacturing, Starwin Products and Dannex by the end of 2019. The newly merged entity is expected to become a leading pharmaceutical giant that will have increased market share, improved synergies and a greater level of efficiency with stronger market prospects.


The equity market is expected to start making a recovery heading into the 2020 election year, as a result of stable macroeconomic metrics and a relatively stable local currency. Attractive valuations by companies in the financial, oil marketing, fast-moving consumer goods and telecommunications sectors, with some stocks trading close to or below book values, are expected to drive this recovery. Additionally, the freeof-payment delivery regulations that were introduced by the SEC will make stock on the GSE more attractive to foreign investors, since they will be able to settle trades for securities that are purchased on the local bourse in a jurisdiction of their choice, affording them the flexibility to reduce currency risk to the bare minimum.