The question about efficiency of the capital market always comes up in my mind. And now I am asking how fast information released by stakeholders of the market affects or reflect on prices on the exchange.
Shareholders make investment decisions based on the
information they get from stakeholders of the market. Such information include
new tax measures announced by the government, announcement of new products by
the company, release of annual reports and announcement of higher or lower
dividends. In the advanced markets, for instance on Wall Street, information released by
companies or the government rapidly reflects on the prices of shares within
minutes. Information release at non-trading hours affects the market in the
next trading session.
In the Ghanaian market on the other hand, one can hardly tell
the relationship between information and their effect on the prices in the
market. Moreover, the speed of reflection on the market varies from time to
time.In the immediate past, CAL Bank share price saw a decrease when there was a problem in the company with respect to share transfer between two parties. How direct and certain can one be to link the cause of decrease in share price to that particular information? Other stocks in the market have shown similar trend. By my observations in the earnings season, share prices respond to the performance of companies as reported by their financial. Even at this time, the speed of reflection is an issue to be concerned about.
I can’t wait for the
capital market to reach the point where information takes minutes to reflect on
the market. This would make the market active and inform investors in making
good decisions moreover, aiding accurate speculations.
