REVIEW OF STOCK MARKET PERFORMANCE 2007

The year 2007 was truly “golden” for Ghana’s capital market including the Ghana Stock Exchange. It reflected in market performance, in primary market activities leading to listings, and in the promotion of the market to Ghanaians and investors beyond Ghana.

The culmination of many of these give much optimism for the current year, 2008.

Market Performance
Secondary trading on the floor of the Exchange saw in 2007, a tremendous improvement over the recent past.  While the volume of shares traded rose by 193% from 98million in 2006 to 287million  in 2007, the value of total shares traded rose from GH¢47.60million to GH¢140.71million.
                                                                                   
GSE All-Share Index
The GSE All-Share Index, in 2007 crossed the 6,000 mark and closed the year at 6,599 points, registering a gain of 31.84% compared to a marginal 4.28% gain in 2006.  Of the thirty-two companies listed, four companies made gains in share prices ranging between 108% and 50%; six companies made gains ranging between 50% and 20%; two companies recorded gains between 20 and 10%, two companies also recorded marginal gains, thirteen maintained their share prices while seven recorded marginal loses on their share prices.

Market Capitalization
As a result of the impressive secondary trading activity and listings, the total value of the market or market capitalization increased by more than GH¢1 billion from GH¢11.25billion at December 2006 to GH¢12.37billion at the close of December 2007.

Underlying Factors for 2007 Performance
A number of factors contributed to the performance recorded for the year 2007.  The key ones are as follows:-

1. The stable and improved macro economic environment (declining inflation, interest rates reduction albeit slowly, among others).
2. Efforts at tackling the infrastructural base including the resolution of the energy crisis.
3. Increased visibility of the market from promotional activities such as : public offers (GOIL, SIC, GSR); the hosting by Ghana of the African Securities Exchanges Association (ASEA) Conference in October 2007; the stepping up of harmonization talks with markets in West Africa as well as some high profile visits to the Exchange.
4. Ghana’s entry into the international bond market which also brought in its trail the attention of non-resident investors on Ghana.

Primary Market Activities & Listings
There were many primary market activities during the year with the last quarter of the year recording the most activities.  Listings and the promotion of the Exchange so as to have companies operating in Ghana turn to list on the Exchange has always been the key goal and will remain so for the foreseeable future.
In 2007, the market saw, among others, the following public offers.

f)          Government of Ghana Bonds also issued on the primary market, 2, 3 & 5-year bonds numbering forty-eight and worth a little over GH¢1 billion.  These were also listed on the Exchange.

Automation Project
Many investors or followers of the market may be aware that Ghana Stock Exchange with the support of the Government’s Economic Management and Capacity Building Project is in the process of automating its Trading Platform.  In 2007, the Exchange went through an international competitive bidding process, selected a winning bid and signed a contract with Infotech (Pvt) Ltd of Pakistan which hopefully will see the Exchange go automated trading in June 2008.

ASEA – African Securities Exchanges Association
The 1th Annual Conference of ASEA was hosted by Ghana Stock Exchange in October 2007. The conference was by all indications, one of the finest if not the best in ASEA’s history in terms of number of participating countries and delegates; local and international speakers; and high profile guests that attended.

Harmonization of West African markets
Also in 2007, the Exchange continued but stepped up discussions among the three West African Exchanges (Nigeria, BRVM in Cote d’Ivoire and Ghana) on
harmonization including
the harmonization of regulations and rules as well as operational procedures.

The aim is to ultimately allow investors and issuers access to all of the West African Markets.

Re-denomination
One of the major things that happened on the financial landscape in 2007 was the re-denomination of the Ghanaian currency by the Central Bank, the Bank of Ghana.  As part of the change-over, the Ghana Stock Exchange changed the format of its Official List to report share prices to four (4) decimal points, among others.  This was done with the intention to review the pricing to two (2) decimal places in December 2007 at the earliest or in June 2008 at the latest. 

Visitors
The Ghana Stock Exchange’s Trading Floor in 2007, played host to very august local and international visitors including the:

            i)          Chairman of Ghana’s Council of State, Prof. Adzei Bekoe;
            ii)         Minister of Finance, Hon. Kwadwo Baah-Wiredu;

1. Lord Mayor of the City of London, Rt. Hon. John Stuttard;
2. US Treasury Secretary, Hon. Henry Paulson; and
3. Governor of Bank of Ghana, Dr. Paul Acquah.

Securities Courses
In 2007, the Exchange continued the organization of its Securities Courses.  They were highly patronized.  The Exchange’s courses which are pre-requisites for the licensing of Authorized Dealing Officers (ADOs) and have been running since 1992, is open to the public.  An estimated number of 6,000 students and professionals have taken the courses and half of this number have sat and passed the relevant exams.

Prospects for 2008
1)         The year 2008 will be a watershed for Ghana’s capital market in view of major changes that will come along in 2008.  First of all, the Ghana Stock Exchange by June 2008 would have gone live with an automated trading platform.  It will at that point do away with the white boards that are currently in use on the Trading Floor.

2)         Also in 2008, the market will move all paper share certification of listed companies into a Depository regime and thereby resort to electronic clearing, settlements and keeping of shareholding records.

Under these arrangements which will be carefully and widely publicized for utmost participation, every investor who trades on the Exchange will be required to open an account with the Depository. 

The account investors open will show records of shareholdings of investors (balances, purchases and sales of shares, etc.) so that on receipt of regular statements, every shareholder can know all his ownership of listed shares.

The goal is to reduce risks (of loss, impersonation, forgery, etc.) associated with the present paper certification and make it easier for investors to trade in listed securities thereby improving liquidity on the market.

3)         In 2008, the Exchange also expects to focus attention on a number of prospective listings and facilitate their primary market offer and subsequent listing on the Exchange preferably before the end of the third quarter of 2008.  These will include equities and debt instruments.

Finally, as part of efforts to ensure the smooth take off and wide acceptance of these innovations, the Exchange will step up public education among the investing public throughout 2008 while seeking the support of the media in that direction.