2020 Comeback year for GSE - Ekow Afedzie
The Managing Director of the Ghana Stock Exchange (GSE), Mr Ekow Afedzie, has expressed optimism that the bourse will recover from its two-straight losses in 2018 and 2019 to post strong returns for investors this year.
Mr Afedzie told journalists in Accra on Tuesday that his optimism was anchored on history, which showed that the GSE had, since the start of trading in 1990, recorded higher annual returns immediately after it had posted losses.
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His assurance followed the bearish performance of the GSE in 2018 and 2019, when annualised returns on equity investments were negative 0.29 per cent and negative 12.25 per cent respectively.
The negative returns were mainly as a result of the spillover effects of the banking sector clean up exercise, which analysts said weakened investor confidence in financial stocks and equity trading in general, starting from August 2017 when it took its first casualties.
While describing the negative returns as characteristics of stock markets, Mr Afedzie said investors and the general public must not lose confidence in the bourse as “the market moves up and down.”
“The fact that we are down today does not mean that we will be down forever.
“We will surely be up this year,” he said at the press briefing that was meant to update the media on the activities of the exchange.
Historical trend
Referencing data from the GSE on its performance since inception, the MD said the exchange first overturned its negative performances in 1991 and 1992 to record its biggest year-to-date returns of 113.74 per cent and 124.34 per cent in 1993 and 1994 respectively.
Since then, he said the trend continued; with the most recent recurrence being in 2017, when the exchange again successfully overturned two-straight negative year-to-date returns of 11.77 per cent and 15.33 per cent in 2015 and 2016 respectively to post a positive return of 52.73 per cent to investors in that year.
Beyond the historical trend, which showed that the GSE would bounce back this year, Mr Afedzie said evidence showed that the economy would perform better this year compared to the past years.
He said the projected positive economic growth was expected to rub on the capital market, leading to increased activity and positive return to investors.
Already, he said the market had showed signs of optimism, with the financial stocks index (FSI), which tracks the performances of financial stocks on the market, registering a positive year-to-date return as of February 17.
“So, we are likely to have the market pick up this year,” he said.
He added that the exchange had also stepped up public awareness to help alert people to the benefits of investing in stocks and bonds.
Bond market
Mr Afedzie said although the equity market had been down, activities on the bond market were buoyant but said he expected the latter to pick up in the coming days.
He said since 2015 that the Ghana Fixed Income Market (GFIM) was introduced to trade in bonds, total trades have increased 10 folds, from GH¢5 billion in 2016 to GH¢55 billion last year.
“So, as equities go down in terms of prices, the bond market is doing very well and it is a natural thing where when you find interest rates going up, people tend to shift towards the bond side,” he said.
“But the smart ones also buy equities and keep to sell when the market picks up,” he said but added that it was only an observation and not an advice.
Achievements
Established in 1989, the GSE started its first selling and buying of shares in 1990 but has since expanded its service to include a secondary market for small and medium enterprises (SMEs) and GFIM for the trading of corporate and government bonds.
In its 30 years of existence, Mr Afedzie said the exchange had become an integral part of economic development by serving as an avenue for the government and companies to raise capital for expansion.
He said data showed that since 1990, companies raised a total of GH¢5.3 billion through shares and GH¢7.6 billion through bonds.
He said a total of GH¢146.1 billion Government of Ghana (GoG) bonds had also been traded since 2015, when it was introduced.