GSE poor performance due to financial sector crises – Council Chair

The performance of the Ghana Stock Exchange (GSE) markets worsened in 2019, with it composite index ending the year at negative 12.5 per cent, compared to negative 0.29 per cent in 2018.

The unimpressive performance was attributed to the financial sector reforms which started in 2018 and continued in 2019.

At the annual general meeting of the local bourse, the Chairman of the Council of GSE, Mr Albert Essien, said the exchange was not insulated from the developments in the financial sector in 2018 and 2019.

“Just as the positive effect of the banking sector reforms which started in 2018 were beginning to manifest, the Securities and Exchange Commission (SEC) also stepped up its surveillance activities to streamline the activities of the licensed asset management companies and to enforce compliance and guidelines on related party transactions.

“Some of these companies were shut down and others had red flags raised on their operations. This turbulence in the financial sector and its related consequences affected market confidence and performance.

“The GSE composite index, which measures the performance of the entire market, ended the year at negative 12.5 per cent compared to the negative 0.29 per cent recorded in 2018,” he stated.

He said the negative impact of the financial sector reforms and subsequent losses suffered by investors who invested their monies with the affected companies had an adverse impact on the 2019 share price performance of listed companies resulting in a decline in the financial market index as well.

Market capitalisation

He noted that market turnover in 2019 was, however, higher than the previous year which was due to some extraordinary trades.

“The volume of shares traded for the year stood at 2.8 billion shares valued at GH¢624 million compared to the volume of 200 million shares valued at GH¢659 million for 2018.

“The market capitalisation for all listed companies in 2019 was GH¢56.7 billion, compared to GH¢61.1 billion in 2018, representing a decrease of 7.11 per cent,” he stated.

He said domestic market capitalisation recorded a 10.66 per cent dip, ending December 2019 at GH¢22.6 billion compared to GH¢25.3 billion in 2018.

Reduced surplus

Mr Essien noted that due to the challenges in the year under review, the GSE recorded a surplus after tax of GH¢8.43 million compared to GH¢11.97 million in 2018.

“This notwithstanding, the net liquidity grew by 21 per cent to GH¢22.93 million and the reserve fund improved by 39 per cent to GH¢15.32 million,” he noted.

Support to listed SMEs

Responding to questions, the Managing Director of the GSE, Mr Ekow Afedzie, said the exchange would soon roll out some measures to support small and medium enterprises that were listed on the Ghana Alternative Market (GAX).

“As we speak, we have not come up with any concrete measures to support them, but we have realised that other markets are putting in place measures to support them and as an exchange, we will also support them.

“Already, we have made it very easy for them to raise money on the GAX but we will soon come out with other measures to support them. But we are not a bank, so we cannot give them a financial bailout,” he stated.