The Ghana Stock Exchange is targeting a total of 50 listed companies within five years, up from 34, and will launch an alternative market this year to enable smaller companies to raise capital. It will also introduce its first exchange traded fund, deputy managing director Ekow Afedzie told Reuters in a telephone interview.
"Our target is to get 50 listed companies as early as possible ... to make the market look more viable and more interesting. We are giving ourselves three to five years," he said on Thursday. Afedzie said the west African cocoa producer's solid economic fundamentals, the government's recapitalisation of the banking sector and pension reforms would all contribute to the growth of the stock market.
"I think there is potential for the market to grow," he said. "The macroeconomic environment is very stable. Inflation is below 10 percent and it has been like that for a long time. We have seen a little instability in the currency, but it has stabilised now." He said the bourse, which has a market capitalisation of 50 billion cedis ($29 billion), was aiming to add three or four companies by the end of the year and he hoped this would include at least one bank.
Just seven of Ghana's 27 banks are listed on the stock exchange, and the Bank of Ghana is encouraging lenders to use the stock market to meet minimum capitalisation requirements of 60 million cedis. "They have up to December to be able to meet their minimum capital requirements," said Afedzie. "We are hoping one or two of them will use the market to raise capital."
He added that pension fund reforms introduced in 2008 would lead to the release of additional funds that could boost the stock market. The bourse has also introduced rules for exchange traded funds and is aiming to list a gold-based ETF within the next month or two, Afedzie said.
"Now that we have the rules, other groups can create all kinds of ETFs, should they be interested," he said. The alternative market, to be launched in the second half of the year, will focus on companies "with the potential for growth", including small and medium-sized businesses and start-ups, Afedzie said, and will have more flexible requirements than the main board.
There will be no listing or application fees and companies must have minimum capital of 250,000 cedis, compared with 1 million for the main index. Under rules that still have to be approved by the Securities and Exchange Commission, the minimum number of shareholders companies must have in order to list has been reduced to 20 from 100 on the main market.
Afedzie said the alternative market could be more successful than the main market, potentially attracting "30 to 50 companies in a few years". The main bourse was established in 1990 with 11 companies and has since added 23, roughly one a year, the GSE council chairman said.