Capital Markets
From The Report: Ghana 2017
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The Ghanaian capital markets have a long road ahead. Expanding equity listings, promoting the languishing bond market and introducing more sophisticated products will remain as significant challenges in the coming years. Still, Ghana is fortunate to have at its disposal all of the tools necessary to meet these challenges head-on. The question remains, however, whether the country is able to develop a comprehensive strategy and build consensus among all stakeholders to see it through to the end. Should it be successful in creating such a strategy, it will reap the benefits both on the exchange as well as in the wider economy.

This chapter contains viewpoints from Kweku Bedu-Addo, Chairman, Ghana Stock Exchange; and William Adjovu, Managing Director, Liberty Capital.

Articles from this Chapter

Overview

Full steam ahead: Work is continuing apace to improve the sector
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In line with financial markets around the globe, the Ghana Stock Exchange (GSE) experienced a tumultuous year in 2015, with the GSE Composite Index ending 11.77% lower than at the close of 2014. This was driven by a slowing economy and softening performance in the financial services sector. The financial index, which accounted for less than a quarter (22%) of the GSE’s market capitalisation but nearly half (48.9%) of its trading value in 2015, fell by 13.98% over the same period. Economic…

Analysis

New horizons: The introduction of new financial instruments is in the pipeline
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A bill updating the 1993 Securities Industry Law is slowly making its way through the halls of Ghana’s Parliament. The existing law has become out of step with many of the advances of an increasingly global market. The new legislation would seek to tighten regulation, increase transparency, better facilitate cross-border transactions and allow for the introduction of derivatives and alternative investments. Reit Investment in the country’s growing real estate sector will be one major…

Viewpoint

Riding the cycle: Kweku Bedu-Addo, Chairman, Ghana Stock Exchange (GSE), on renewed investment prospects in the equities market
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Viewpoint:Kweku Bedu-Addo Ghana has experienced some formidable macroeconomic challenges since 2013, characterised by high inflation in excess of 20% per annum; a slowdown in real annual GDP growth to below 4%; a sharp rise in the deficit-to-GDP ratio to above 12%; a debt-to-GDP ratio higher than 60%; a sharp annual depreciation of the Ghanaian cedi in consecutive years; and an extended energy crisis. In addition, the country signed on to a three-year IMF front-loaded extended credit facility…

Viewpoint

Constructive ventures: William Adjovu, Managing Director, Liberty Capital, on the capital market and youth employment
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Viewpoint: William Adjovu A major challenge facing many countries is generating youth employment opportunities. An estimated 80% of unemployed youth are in developing countries and transient economies. In Ghana one out of every four people is 15 to 24 years old, and the country has an average annual growth rate of about 2.5%, according to the 2010 census. The private sector is the largest employer in Ghana, accounting for 93.1% of economically active people, with the public sector accounting for…

Analysis

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

Analysis

Bonds: Debt market activity is increasing steadily
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The restructuring of the financial market facilitated the creation and growth of the bond market in Ghana. The bond market has improved since the first trading of Ghana Stock Exchange (GSE) commemorative registered stock in 1990. These bonds were five-year debt instruments issued to provide a foundation for active bond trading on the newly created GSE. This was then followed by the Home Finance Company’s dollar housing bond series. The government flooded the market with a number of bonds…

Analysis

Real estate: Although real estate has slowed down, REITs hold potential
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Ghana’s emerging real estate sector contributes significantly to the development of the economy as far as housing is concerned. The government has helped to establish the Ghana Real Estate Developers Association as an initiative for public and private sector participation in housing investment and delivery. The association was formally inaugurated on October 28, 1998 under the laws of the country as a private company limited by guarantee. Funding The real estate sector in Ghana is changing in…