- Significantly improve visibility & liquidity
- Attract more retail investors
The Ghana Stock Exchange (GSE) is set to roll out grand plans that will attract more companies to list shares or sell bonds, improve liquidity and make the local bourse the sub-region’s preferred destination to raise long-term capital, improve corporate governance and make money.
Even though the exchange’s equity performance was bearish in 2019 and so far mixed in 2020, the leadership and managers of the bourse believe that a raft of measures including transitioning the exchange from a frontier to emerging market, getting 100 equities listed in five years, and improving liquidity via attracting more retail investors would make the GSE one of the biggest players in the region.
From frontier to emerging market
Ekow Afedzie, Managing Director of the exchange, told the B&FT that one of the big plans to boost more activity is transitioning from frontier market, which is a small-sized market, to a middle level called emerging market and go to advanced market.
“That is a key thing for us this decade. Transitioning from frontier market to an emerging market would allow us to attract all kinds of international investors, big fund managers and others. Issuers can take advantage of the fact that now the supply side is available and investors are prepared to put in money, and that would attract companies to list on the market.
We want to become the preferred platform for raising capital and investing. We need to create the environment that would think of the exchange first when it comes to investing, because we have shares, bonds and bills traded,” he said.
He added that the GSE will soon be signing a Memorandum of Understanding (MoU), by end of January, with the London Stock Exchange Group; and this arrangement will help the two institutes collaborate to develop the Ghanaian market from frontier to emerging and advanced market satus.
Use exchange to raise long-term capital
Mr. Afedzie noted that with most companies needing long-term financing as they grow, business leaders must look at the stock exchange as the assured means of raising that financing: either via shares or bonds or a hybrid of those options.
“We want companies to use the market to raise funds via bonds or shares. Corporate companies have raised a total of GH¢7billion through bonds, and fund managers and other investors have bought and sold GH¢55billion worth of bonds. That makes it one of the highest in sub-Saharan Africa,” he said.
Providing more visibility and liquidity
Some analysts have complained about the low visibility and liquidity of the GSE, which does not help investors to choose investments via the exchange against other options.
But Mr. Afedzie has laid out a plan that involves deeper collaboration with stakeholders such as the Central Securities Depository (CSD), and regulators such as the Securities and Exchange Commission (SEC) and Bank of Ghana (BoG) to make the exchange more visible.
“We want to educate Ghanaians to inculcate the habit of savings and investments. Investors must think of returns, liquidity and risks. If someone is promising you 10 percent a month, ask yourself how risky is that; and if you want your money back, can you get it back?
We must get many shareholders to buy and sell, because if you don’t have enough shareholders you can’t improve liquidity. Also, the shares must be available to buy and sell, and then information must be available. So, disclosure is very important. Companies listed must disclose and put information out there,” he said.
He added that the exchange will be using technology, and one of such is mobile trading. Some brokers, he noted, have started utilising mobile technologies to buy and sell shares on behalf of investors – and the exchange will be encouraging that because it improves accessibility.
“We have just 40 listed equities on our market, but within five years we should get to 100 listed equities. So far, we have 10 companies that have raised bonds, and so that is another sector to grow significantly,” he said.