MTN localisation drive encouraging domestic equity holdings

The MTN Ghana

The localisation policy of MTN Ghana is positively impacting the domestic equity shares on the stock market, deputy Managing Director of the Ghana Stock Exchange, Abena Amoah, has revealed.

The nation’s largest telecommunication company is due to localising its ownership by 30 percent for both arms of its operations – Scancom Plc (MTN Ghana) and MTN Mobile Money Ltd. – by the close of 2022 to further deepen the local content of its ownership mix.

The localization, which is a requirement by the National Communication Authority (NCA), was initially 25 percent for Scancom PLC in line with regulatory requirements.

In an interview with the B&FT, Ms. Amoah said: “There is a key element driving this year’s volumes on the equity market, and that is what we call the MTN localisation policy. MTN is in the markets selling another 12 percent or so of its shares.”

Accordingly, this has partly driven the increasing level of the local investors holding on the market higher.

“So this year’s trading has come from a foreigner who does selling down but selling to Ghanaian investors. So it’s balanced, and what we’ve seen is that it has pushed up the local equity investor participation because they are selling to Ghanaian investors higher this year,” she explained.

Cumulatively, equity volumes traded on the stock stood at 1.1 billion trades, valued at GH¢1.06billion, year to date ending June 30, 2022. This represents an increase of 233.56 percent and 245.17 percent over the same period last year.

Foreign investors contributed 62 percent of equity market trades between January and June 2022 compared to 68 percent for the same period in 2021. Pension funds contributed to three percent of equity trades between January and June 2022 compared to seven percent for the same period in 2021.

Describing the benefit of the stock market to investors, the deputy MD mentioned that the equity market would need a long-term continuous public education on what they stand to gain by investing on that market.

“So, the equity story is what we ourselves understand is patience. There are times you will definitely win; but over the long-term, the equity story shows return higher than inflation which gives some of the best returns,” she said.

Currently, the level of financial literacy for most local investors and the skills set of investment professionals are relatively low. As the investing population grows, enhancing investing knowledge becomes more important through a regular, sustained and well-planned financial education campaign.

In view of this, Ms. Amoah noted that increasing the awareness of risks and returns, personal financial planning, rising income levels, planning for retirement as the economy matures will help individuals make financial decisions that are more important to the future.

“There’s one stock in the equities market which has dividend yield of more than 30 percent, today. There’s one listed company whose dividend is around 34 percent before any potential capital gains, while some other companies listed so far this year have their share price gone up more than 200 percent. However, overall, the market is down 10.5 percent,” she highlighted.

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