Friday, November 25, 2011

Listing & Trading Rules are set for ETFs on GSE.

Exchange Traded Funds (ETFs) are considered by some financial gurus as an investment product of choice for the inexperienced trader all the way to the professional money managers. In emerging financial markets like that of Ghana, ETFs are yet to see the light of the day. The Ghana Stock Exchange (GSE) announced the introduction of  ETFs in to the market sometime ago and finally, the Securities and Exchange Commission (SEC) has approved the Rules for the Exchange Traded Funds. 
The general listing rules prescribing the requirements for obtaining and maintaining the listing of securities on the Ghana Stock Exchange does not apply to ETFs hence different rules were set for listing and trading. With reference to the Rules for ETFs released this month, trades in ETFs shall be settled through the Clearing and Settlement System of the GSE and Securities Depository System of GSE Securities Depository Ltd just like stocks on the GSE.
This same document revealed that an application for the issue of ETFs must include, Net Asset Value (NAV) of the ETF as at the date of application and the Percentage change of the NAV of the underlying basket of securities / index / underlying asset for the previous 6 months on a weekly basis, among others. The criteria for listing revealed that, the ETFs must be open-ended and fully secured at all times: either by the underlying securities/commodities or financial instruments it represents, a proxy security
acceptable to GSE which should be listed, freely tradable and have adequate liquidity or cash. Looking at the current affairs of the capital market, liquidity issues are very important to the GSE & SEC.
Further scrutiny of the rules showed that, ETF issuers must undertake to compute the Net Asset Value of the ETF on a daily basis and make the NAV public to all market participants at the same time through the GSE. Obviously, no insider trading would be encouraged. The condition for listing stipulated among a list of requirements that, GSE may, in its overriding discretion, grant a listing to an Issuer who does not fulfill the requirements set out or refuse a listing to an Issuer who does not comply with the listing requirements on the basis that, in the GSE’s opinion, the grant or refusal of the listing is in the interest of the investing public.

In terms of pricing the ETFs, the rules stated that, the issue price shall be on a basis approved by the Exchange and shall not include management charges and other fees. Moreover all management charges and other fees are required to be separately specified in the offer Document.

The rules for ETFs are very clear and easy to understand. For more analysis of the essence of these rules, join me on Twitter: peagama (click to follow) or facebook: Patrick .... and let's discuss.
For more details on the Rules for ETFs in Ghana, Click to download full document. (Courtesy: GSE, & SEC).

Wednesday, November 16, 2011

Looking at the GH 2012 Budget, the Bond way.

The 2012 Budget with the theme “Infrastructural Development for Accelerated Growth and Job Creation” was described by the Majority in Parliament as the best ever but the Minority said it was a repetition of the past budget. The Minister for Finance and Economic Planning, Dr. Kwabena Duffuor outlined in his speech, the plans for the Bond Market and that was what caught my attention.
Over the years, the capital market has been growing slowly and highly dominated by activities in the stock market. The bond market on the other hand is dominated by the Government bonds with very few corporate bonds. In order to ensure accelerated growth as predicted by the budget, the government plans to deepen the bond market. To ensure long term debt instruments, the government of Ghana would be issuing a 7-year and 10-year fixed rate bond next year. In addition, the government will set up a National Bond Market Committee in 2012 to undertake the tasks. Dr. Kwabena Duffour mentioned that, this Committee would be tasked to first of all, identify the constraints in the development of corporate bond market. Moreover, it would study and recommend legal, institutional and process changes needed to accelerate the development of a corporate bond market.
 The Minister further outlined that; this committee would monitor the performance of the government bond market and to improve its effectiveness as an anchor for the corporate bond market. In regards of deepening the bond market, this committee would finally assist the private sector to access the bond market by proposing appropriate financial/technical assistance mechanisms.
This move by the Government for the 2012 fiscal year is good for the bond market and the capital market as a whole.
We hope to see it manifest. Else...................... 

Friday, November 11, 2011

11/11/11 on the Ghana Stock Exchange.

The number 11 is perceived by many people as 'A LUCKY NUMBER'. In Astronomy, Apollo 11 was the first manned spacecraft to land on the Moon and  in religion, the Eleven apostles of Jesus (i. e. Judas excluded) were perceived to be the blessed and righteous ones. On this special day, 11th Nov., 2011, let us take a look at what happened on the Ghana Stock Exchange to see whether the fortune of the day had an effect on trading.
A volume of 130,810 shares were traded today, which was barely half of what was traded yesterday and the GSE Composite Index (CI) dropped by -0.86 points to close at 997.42. 
Meanwhile, the GSE Financial Stock Index gained 2.72 points to close at 900.31. 
GSE-CI is lower than the base index of 1000 that was valued on December 31, 2010.
Six (6) stocks recorded changes in price today. 
TOTAL traded 180 shares and lost 0.01p to close at GHC 21.00.
Tullow Oil (TLW) also traded 161 shares and lost 0.08p to close at GHC 31.00.  
Two banking stocks, Standard Chartered Bank (SCB) and Ecobank Ghana (EBG)
closed at GHC 45.50 and GHC 3.45  by losing 0.02p and 0.05p after trading 100 and
14515 shares respectively. SIC Insurance and Benso Oil Palm Plantation (BOPP)
also gained 0.01p each to close at 0.41p and 0.86p respectively.
Today's trading only favoured some financial stocks but not the Composite index. 

Thursday, November 10, 2011

Shareholding of The Trust Bank (TTB) as Ecobank tries a Takeover

The Trust Bank (TTB), with about 20 networked branches covering Ghana,  is undergoing a takeover by Ecobank which most people including the Coalition for the Protection of Individual and Constitutional Rights are against. Meanwhile, shareholders of TTB, are strongly in favour of the takeover by Ecobank, the leading Pan- African Bank. Who then owns TTB?

The shareholding structure of TTB reveals that, The Social Security and National Insurance Trust (SSNIT), the single largest pension fund in Ghana is the largest shareholder with about 61.11% stake. SSNIT, with reference to the recent pressure from pensioners supports the takeover. 
The second largest shareholder is Compagnie Africaine de Financement et de Participation (COFIPA), a Paris-based investment company owned by West African businessmen. COFIPA has also agreed to the takeover by Ecobank. 

 The Trust Bank which remains one of the fastest growing banks in Ghana gained so much trust from Ghanaians and that reflected in the Total Bank Deposits rising from about 39.17million GH cedis in 2003 to about 239.55 million GH cedis in 2010.

The 3rd largest shareholder of TTB is FMO – The Netherlands development finance company,which has about 10.00% stake. FMO, like other shareholders have voted in favour of the takeover by Ecobank.
The Ghana Reinsurance Organisation remains the second major local shareholders of The Trust Bank. It has about 9.39% stake in TTB making it the 4th largest shareholder. With a stand just like SSNIT, Ghana Reinsurance Org. supports the takeover despite the rumour that the Minister of Finance, Dr Kwabena Duffuor, has blocked the takeover.

Africa Tiger Mutual fund, an investment company registered in Ghana, is the smallest shareholder of TTB. And with 6.00% stake, it stands to be the 5th and the 3rd local shareholder of TTB.

Only time can tell whether the sale of TTB to Ecobank Transnational Incorporated (ETI) would be successful. 

Thursday, November 3, 2011

Year Highs & Lows of Fan Milk Limited on Ghana Stock Exchange

After ten (10) months of trading on the Ghana Stock Exchange (GSE), the Year High of Fan Milk Limited (FML) still remains low comparably, and this is not impressive. Last year, Fan Milk Limited recorded a Year high of GHȻ 10.57 by the close of trading on 10th December, 2010. In that same year, the Year Low of FML as at 10th Dec. was GHȻ 5.55, although GHC 2.5 was recorded on 4th & 5th January. Investors obviously had confidence in the ice cream company and kept trading shares day to day. 

Fan Milk Limited began the year, 2011, with a Year High of GHȻ 2.45 (i.e. on 4th January) and ten (10) months down the road, the Year High was recorded as GHȻ 3.11 (i.e. on 2nd November). October ended with a little tumble of FML share price but November brought a recovery smile as investors gained confidence in the stock. Trading of FML shares on the GSE have been consistent since last week and this is good for the market.

The ice cream company still remains the leading producer of ice cream in the Ghanaian market. Monopoly, people call it, but I call it Supremacy. FML is currently trading at GHȻ 2.53 per share.


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