- more than 70% of overall market volume
Over-the-counter (OTC) transactions by the market leader – MTN – accounted for 71 percent of the volume of trades on the Ghana Stock Exchange (GSE) in the first half of the year.
An OTC Market refers to a decentralised arrangement in which market participants trade securities – stocks, commodities, currencies, or other instruments directly between two parties and without a central exchange or broker, often by companies who fail to meet listing requirements or those who want to stay outside the purview of the stock exchange.
The telco’s stocks were sold primarily to domestic institutional investors as MTN inches closer to its goal of increasing its local ownership to 30 percent by the end of the current fiscal year.
During the period, the GSE saw a total of 1.09 billion shares trade hands at a value of GH¢1.06billion. Of the figure, MTN was responsible for 1.05 billion in volume traded.
The telco’s trades, which include free-of-payment trades worth GH¢726million from the exchange of 783m shares, resulted in a 233.56 percent and 245.17 percent increase in volume and value respectively, for the overall market, compared to the same period last year.
In its assessment of the period under review and offering expectations for the second half of the year, financial services provider, Databank, said the development has skewed price discovery as demand by local institutional investors is driven off-market.
This weight of domestic investors has become increasingly pronounced as offshore participants have withdrawn from the market owing to heightened concerns over the broader economy.
Between January and June, foreign investors contributed 62 percent of equity market trades, compared to 68 percent for the same period in 2021.
“The negotiated trades continue to channel institutional investor demand off the bourse, limiting price discovery,” Databank noted.
The asset management and advisory company, however, expects the trend to continue as the telco seeks to meet its end-of-the-year target.
“Again, we expect the continued off-the-market transactions by MTN Ghana in a bid to meet the regulatory 30 percent local shareholding to weigh on demand on the market,” it added.
Currently, the OTC Market is not open to the primary market, that is before shares are floated on the GSE. Shares already listed on the secondary market, however, can be traded off-market.
Managers of the Accra bourse have indicated that as part of a revision of its rules to keep in step with global best practices, they are working toward a comprehensive framework for the OTC Market, with the end of the year set as the tentative deadline for an introduction of dedicated guidelines.
The proposed changes are before the Securities and Exchange Commission (SEC) for approval, with the changes expected to take effect in the short term.
