Ghana's state-run pension fund SSNIT intends to gradually ramp up trading of its holdings in local shares when Tullow Oil and other firms float on the west African nation's bourse this year, an executive of the fund told Reuters. The Social Security and National Insurance Trust is by far the largest shareholder on the Ghana Stock Exchange and is accused by some of sitting on shares, snuffing out liquidity in what has the potential to be one of Africa's premier markets.
While SSNIT rejects such criticism, investment and development manager Jerome Eshun said it was gearing up to trade more actively later this year as market developments allow. "We are watching for the flotation of Tullow," Eshun said in an interview, referring to the UK-listed company operating Ghana's Jubilee oilfield that hopes to list shares on the Ghana Stock Exchange (GSE) by the end of the second quarter. "When there are other stocks on the market and when the fundamentals are right we will participate," he said. Eshun said the fund should become more active on the GSE by the end of the third quarter.
"We've started looking at some of the numbers and we are getting the concept paper to our board," he said. "That will change the face of the market substantially." SSNIT has major holdings in Ghanaian blue chips including 21.6 percent of Ghana Commercial Bank, 49.6 percent of CAL Bank, 18.5 percent of Ghana Oil Company and 11 percent of Guinness Ghana.
Analysts expect Ghana's petrodollar-fuelled economy and pension reforms to propel the GSE as much as 40 percent higher this year, with the greatest gains seen in the banking sector. Last year Ghana's All-Share index rose 32 percent, outpacing a 19 percent rise in both the MSCI frontier markets index and the MSCI Africa index.
The newly-created GSE Composite Index is up 8 percent since the start of the year, but volumes remain low, with trade of just 1.67 million cedis ($1.1 million) on Thursday. Some investors say SSNIT's buy-and-hold strategy chokes trading volumes, but Eshun called this a misconception and said the real problem lies in the dearth of listed companies.
"They should not put the blame on SSNIT," he said. "In a system which only has 25 listed equities, the issue now is how the Ghana Stock Exchange is marketing itself so that companies that are not listed become listed." The GSE last year launched an appeal for foreign companies present in Ghana to create local listings to give Ghanaians easier access to investment opportunities, but so far few have come forward. The fund's monthly inflows fell significantly in the aftermath of pension fund reforms late last year that reduced the portion of salary contributions going to SSNIT to 11.5 percent from 17.5 percent, Eshun said.