The Ecobank Development Corporation (EDC) has asked government to consider diversifying future State-Owned-Enterprises (SOEs) through the stock market to help deepen activities on the bourse.
“Divestiture of state firms through stock exchange activity will deepen our stock exchange activities and encourage market participation.”
Government, through the Divestiture Implementation Committee (DIC), is privatising firms which include Subri Industrial Plantation Limited, GIHOC Glass Company Limited (GGCL), Bonsa Trye Company Ltd, and GIHOC Footwear Company Limited.
Mr Michael Cobblah, Country Representative of EDC who made this observation in Accra, emphasised that activities on the stock market are shallow and efforts must be to correct it.
“The market has been under downward pressure, recording overheating of market in 2008, inducing a markets correction due to unattractive multiples and jittery retail sell-offs due to speculative buying of hard currency and overdose of news on the financial crisis.”
Market Capitalisation at the end of June 2009 was GH¢15,279.49million (US$10,465.40m), compared with GH¢15,587.76million (US$15,133.74m) at the end of June 2008.
Turnover was however significantly lower than that for the same period in 2008. The half year to June, 2009 recorded a total volume of 41.47million shares valued at GH¢37.69million compared with a volume and value of 189.08 million shares valued at GH¢196.53m for the same period in 2008.
Mr. Cobblah, making a presentation at the EDC’s second iForum series aimed at sensitising its client on the state of the economy, predicted that the capital market will indeed have some busy activities with the lined-up issues - which is encouraging for prospects of the market's viability in terms of capitalisation, liquidity and volume of trading.
He noted that the current state of the economy in general recorded a higher premium by banks on risk rates from government. Interest rates are relatively high, with mortgage loans attracting rates in excess of approximately 70 percent.
Bank base rates remain above 30 percent.
He again indicated that government revenue collection is robust, representing 78.6 percent of projection for the period ending September 2009.
Total revenue and grants was 17.1 percent of Gross Domestic Products (GDP) compared to 18.5 percent in 2008.
Budget deficit reduced to 4.17 percent of GDP as at August 2009, compared to 8.8 percent in August 2008.
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