Cal Bank Ltd stock most traded on local bourse

Banking stocks had been the most traded on the Ghana Stock Exchange (GSE) prior to 2017. However, the number recorded in those years do not match current trends, despite the fact that some more banks have listed on the exchange.

Liquidity is very critical for every investor as far as their investment is concerned.

As a result, eight banks listed on the exchange have been analysed to demonstrate to investors how quickly the shares can be bought and sold on the GSE.  

Liquidity here simply refers to how ‘‘quickly and efficiently’’ one can buy or sell an asset (stocks) of banks listed on the GSE.

The principle is that "the easier it is to buy and sell, the more liquid it is."

Do you currently hold stocks of any bank listed on the GSE? Or are you yet to consider buying one?

Liquidity is among the three major requirements of a good stock. What is the worth is an investment if converting it into cash will be a difficult thing?

What’s good liquidity for a stock?

Investors should look for, amongst others, liquid stocks and how they are related to profitability and dividend payments. Large trading volume and number of transactions, as well as the size of bids or offers are all signs of a liquid stock.                 

Industry snapshot

The Bank of Ghana website as of November 4, 2022 listed 23 licensed banks. The banking sector in Ghana has seen some restructuring in the past years, with the aim to protect the interest of the general public. Out of the 23, a total of eight are listed on the GSE.

Ecobank is the largest bank in Ghana by assets.

Investment cases

Access Bank: Access bank’s position in terms of liquidity is considered to be average looking at the general conditions of the entire equity market. Stocks are expected to attract more buyers and sellers, giving the introduction of dividends to shareholders

Cal Bank: Cal has an extraordinary liquidity level and so it will be an excellent choice to any investor.

ECOBANK: Ecobank is doing quite well in terms of liquidity, with an average daily trade of 2,625 shares. It is deemed as liquid.

Societe General: SOGEGH beats ADB, SCB, RBGH and ACCESS in terms of stock liquidity. It has a year-to-date (YTD) average daily trade of over 15,000 shares.

Standard Chartered: We rank STANDCHART as the 6th most liquid bank trading on the Ghana Stock Exchange.

GCB Bank: We flag GCB as GREEN in this report because it meets my benchmark of at least 10,000 shares per trading day.

Republic Bank: Republic Bank equally meets the benchmark criteria of this analysis. However, it is very advisable for an investor to have other considerations before selecting it.

ADB: On a year-to-date basis, ADB has the worst liquidity level and we rank them as seventh among its peers in the Banking Industry. With an average traded volume of three shares, it is not a good option compared to its peers.

The Writer is an Analyst, Young Investors Network