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GSE bounces back.

Market activities at the Ghana Stock Exchange (GSE) have bounced back to life after 1995's dismal performance due to the country's unfavourable economic conditions. That year saw very poor share price movements and traded a low volume of shares. In the 1994 annual report of the Federation International de Bourses de Valeurs (FIBV), however, the GSE was described as "performing".

In December 1995, the GSE All Share Index - which tracks market performance - closed at 316.97 points compared to the 1994 level of 298.10 points. This represented a rise of only 6.3%. In 1993, the Index closed at 132.88 points. Three years later, at the close of the business on 29 March 1996, the Index stood at 332.72 points, representing a rise of 4.97%. The total volume of shares traded in stood at 10.67m with a value of C10.9bn.

Speaking at the formal announcement of the Ghana Commercial Bank share offer, Mr Yeboa Amoa, Managing Director of GSE, was happy to confirm that the outlook for 1996 was bright. He pointed to the over-subscription of the GCB share offer by nearly 40%. He commented that it reflected the market's absorption ability when public offers of shares are properly priced, packaged, timed and promoted.

To ensure that the market plays a useful role in the national economy, the Government's 1996 Budget has abolished the 2% stamp duty previously charged on purchases by foreigners and extended the capital gains tax waiver period up until November 2,000.

By the end of the first quarter of this year, the market's total capitalisation crossed the three trillion mark, hitting a record level of C3.07 trillion (tr). The current increases have, in part, been due to increases in some share prices. The listing of additional shares, moreover, of Ashanti Goldfields Company (AGC), due to its acquisition of Cluff Resources plc, and PZ, thanks to a right issue, has also been influential.

Total market capitalisation is expected to rise further by the end of this year, with the listing of the shares of Ghana Commercial Bank, National Investment Bank and other companies on the Exchange. The GSE is currently pressing for the early establishment and full operation of the Securities Regulatory Commission (SRC), while simultaneously advocating the fine-tuning of laws and regulations that control the operations of the capital market.

The Exchange is seeking to improve its rule book for listing, trading, membership, clearing, delivery and settlement.

It is also looking to develop the technology of the market and to create new financial products. It is also working towards improving market surveillance, conflict resolution and enforcement mechanisms in a drive to enhance investor protection. Links with international and global markets are being encouraged to ensure that securities firms have adequate financial muscle and territorial coverage for a fast-growing market.

The Exchange, which witnessed its first floor trading in 12 listed companies on 12 November 1990 with a market capitalisation of C34bn, boasted 19 listed companies with a capitalisation of C2.4tr at the end of December 1995. With three stockbrokers at its inception, the GSE now has 12 licensed stockbroking firms with 11 actively trading on the floor.

Significantly, the simultaneous listing of AGC on the GSE and the London Stock Exchange, coupled with its subsequent listing on the New York Stock Exchange, the Toronto Stock Exchange and the Zimbabwe Stock Exchange, has given the GSE a whole new international dimension and stature.

In pursuit of its main objective to provide a facility through which companies and Government can raise long-term capital for expansion and growth, over C86bn had been raised as at 31 December 1995. This was achieved by 11 companies through private placement, public offering and rights issue. Between November 1990 and December 1995, shares traded on the market totalled 190.9m with a value of about C103.7bn.
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Title Annotation:Ghana Stock Exchange
Author:Evans, Lloyd
Publication:African Business
Date:Jun 1, 1996
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