Ghana Stock Exchange partners SEC, NPRA to woo pension funds

Equities market on course for highest return in half a decade
Ekow Afedzie, Managing Director of the GSE making a point

As part of multi-stakeholder efforts geared toward promoting the capital market, the Ghana Stock Exchange (GSE), in partnership with the Securities and Exchange Commission (SEC) and the National Pensions Regulatory Authority (NPRA), has held a workshop targeted at pension funds.

With most of these funds channeling resources to government-issued securities, ostensibly as a risk-mitigating strategy, the organisers sought to prove, with relevant data, that the other option on the market – equities – was more viable, especially for holders of long-term funds.

For context, the Exchange’s Composite Index as of June 30, 2021, was up an impressive 36.16%; the value of equities traded grew by 58.53% to GH¢307.56 million during the first half of 2021 compared to the same period in 2020 and the fixed income market traded a volume of 107.6 billion, up 117.3% over the same period last year. This performance culminated in the Exchange being adjudged the best performing in Africa for the first half of this year.

Cross-section of participants

In his welcome address, the Managing Director of the GSE, Ekow Afedzie highlighted the long-term, mutual benefits which would accrue to pension operators, their contributors, business owners, and the wider economy, if more resources are channeled to the equities side of the market.

“The opportunities the GSE platform provides for pension funds are enormous in realising good returns for their principals. Though pension fund investments in fixed income securities continue to increase, the same cannot be said of equities. Since pension funds are long-term in nature, opportunities exist for players in this space to invest in equities as well,” he explained.

Director-General of the SEC, Daniel Ogbamey Tetteh, also added his voice to the call for pension fund players to invest in long-term securities including equities in their portfolios. Relying on historical data, he proved that over the medium to long-term, returns from investing in equities outpaces that of every other asset class.

He also indicated that the implementation of some initiatives in the recently launched Capital Market Master Plan would aid in improving liquidity and listings on the Ghana Stock Exchange.

Taking his turn, the Chief Executive Officer of the NPRA, in a speech read on his behalf by his deputy, David Tetteh-Amey Abbey said: “We need to have a vibrant equities market with rewarding returns for pension schemes to channel more investments in making a real impact on the economy. This collaboration between all capital markets players is critical to ensure retirement income security and social protection for all Ghanaians.”

He also highlighted a few concerns that pension stakeholders have expressed for their historically low participation in the equities market, these include liquidity concerns, a misunderstanding of the market, and the cost of transactions.

Other issues which were brought to the fore by participants which included trustees of employer-sponsored pension schemes, corporate trustees, pension fund managers, and licensed stockbrokers of the Exchange, were concerns about corporate governance and investor relations by some listed companies and persons with limited knowledge of finance making ultimately responsible for investment decisions.

On his part, Renowned stockbroker and consultant for the GSE, David Ganesha Tetteh, who served as moderator for the session, echoed sentiments expressed by Rev. Ogbamey Tetteh. He also asked those present to take a cue from the activities of investors from more advanced markets, who actively participate on the local bourse.

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