Cedi, banking clean-up take toll on GSE

The Ghana Stock Exchange (GSE) Composite Index ended 2018 with a negative 0.29 percent compared to the previous year’s 52.73 percent, mainly due to the cedi’s depreciation and the banking sector clean-up.

The domestic currency lost 8.39 percent of its value to the United States dollar in 2018, while the banking sector clean-up – which required universal banks to raise fresh capital of GH₵400million – led to the collapse of seven indigenous lenders. This, coupled with an increase in the rate of 91-day Treasury bills to 14.59 percent, the GSE said, impacted negatively on its performance last year.

Just like its Composite Index, the GSE Financial Stock Index also recorded a negative 6.79 percent return in 2018 compared to the positive 49.51 percent registered the year before.

“There were a number of micro-economic challenges that added to global difficulties. Interest rates on the 91-day Treasury bill inched up from 13.35 percent at the end of 2017 to 14.59 percent at the end of 2018, and the cedi lost 8.39 percent against a strong US dollar compared to a loss of 4.87 percent in 2017.

“There was also the distraction or focus of attention on the banking sector clean-up and recapitalisation, as well as the results posted by listed issuers,” said Kofi S. Yamoah, the GSE’s Managing Director.

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This was revealed at the 2018 Annual General Meeting of the GSE in Accra.

Meanwhile, Albert Essien – the Chairman, in his statement said the volume of shares traded for 2018 was 201 million shares valued at GH₵659million, compared to volume and value of 322 million shares worth GH₵518million registered in 2017.

Market capitalisation for all listed securities at the end of last year was GH₵61.1billion, as against GH₵58.8billion in 2017, representing an increase of 3.97 percent – with domestic capitalisation gaining 56.28 percent 2018.

Outlook for 2019

According to the Managing Director, a number of initiatives are being taken to ensure a better performance in 2019.

Key among them is the preparation and adoption of a new strategic plan for the exchange; irreversible steps toward demutualisation of the GSE; plans to acquire a market surveillance system; and GSE’s active support toward the introduction of a formal repo-purchase agreement for the country, as well as facilitating the Economic Community of West African States’ Secretariat to renew efforts toward integrating the sub-region’s capital markets.

All these, Mr. Yamoah added, are expected to bring about a positive performance by end of the 2019 business year.

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