How fast does information reflect in the prices of shares on the Ghana Stock Exchange?

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.

Building the Economy: Middle Class of Ghana Unconcerned

Are we really sleeping? Then it is time to wake up.

The Middle Class in Ghana, simply don't care. They find means to solve public problems in personal ways and just remain unconcerned, very quiet!! It's a culture problem, people say. Others say Ghanaians just think about their families and not the Public. Scholars blame it on education, stating that, "you can't teach an old dog new tricks". But is this helping the nation? Would it ever? How can we develop with this? Why won't us remain poor? Failed government or State, Failed Top Class, Now failing Middle class & educated elites, and the Voiceless/uneducated poor (which are the most populated).

We have the platforms, we don't use them. We have the knowledge, we don't apply it to help our nation, the worst of all, we sell them cheap to other nations. We have the energy, we misuse it. Oh Mother Ghana!!! How long would the Middle Class decide to be silent. It's pathetic they understand the problems better than anyone but decide to stay away.

Typical Middle Class (educated elites) Behaviors:

Power outage:- Put on the generator (For the family alone) and shut up.

Water Problem:- Get enough Poly-tanks to store water for the family. Don't care about the community or person next door (who's probably voiceless).

Education:- Send children to schools abroad. (No Teachers' strike).

Health:- Go to private hospitals. Don't care if doctors are on strike.

Ehhhhh!!!! My people. Are we safe? When the Voiceless or low class decide to talk or fight back, can we stand them? Ghana, we can't afford to fail God and the next Generation. Let's act NOW in all sectors of the economy. Let's be responsible and not think about our families alone. Let's build the economy of Ghana.

Oh Ghana!!!!. God Help us. Long Live Ghana

Is CAL Bank undervalued on the Ghana Stock Exchange?

The debate continues everywhere among investors as they keep wondering whether CAL Bank shares on the Ghana Stock Exchange are undervalued. My earlier post on the 2011 year review of CAL bank on GSE has shown clear analysis of CAL as at last year. It showed the potential of CAL's share price rising this year as the bank plans to recapitalize to meet the required capital as proposed by the Bank of Ghana. Meanwhile, some investors and market analysts argue that, the share price is undervalued to the extent of stating that there could be a rally on the exchange for these stocks very soon.
Let us look at some figures of the Bank; (courtesy: Bloomberg)

Valuation and Earnings as at 20.02.12.

The Banking stock shows a relative P/E to the GSE Composite Index of 0.2628 and a P/E ratio (ttm) of 3.6220 as reported by market analysts.

With a current market capitalization of about GHC 64.48 million, the Bank would recapitalize this year to meet the requirement.


Dividends figures & Other Market figures

Chart: Share Price Movement from December 2011 to Date on GSE.

How to start investing (103); Various Types of investments in Ghana and their risk profiles.

In the last post on this blog, I wrote on setting an investment goal. Thus if the goals is set, then we are now in the best position to look at the various investments opportunities, their risks and whether they are long term or short term.

The Capital market is a long term market and in Ghana, there are a lot of investment opportunities in this market. First is the investment in Stocks. There are shares of companies listed on the Ghana Stock Exchange(GSE) ranging from the financial industry that includes banks like Standard Chartered Bank (SCB), HFC bank, UT Bank, SG-SSB, Ecobank Ghana limited (EBG), CAL bank , through the manufacturing , mining, agriculture industries to the food/ beverages industries. There are about thirty six (36) companies currently listed on the GSE with various prices from as low as 0.05p per share to as high as GHC 55 (about $ 38) per share.

There are two indexes for the exchange to help investors know the performance of the market and they are the GSE Composite Index (GSE-CI) which includes all stocks on the GSE and the GSE Financial Stock Index (GSE FSI) which include only the financial stocks and currently have a year to date rate of 13% and 6% respectively.

Investors should note that, investing in stocks is a risky but rewarding business hence not advisable until one is properly abreast with the mechanisms involved. Moreover, there are over fifteen (15) brokerage firms that could assist you in making the right investments when it comes to stocks.

Other investment opportunities in the capital market of Ghana include investing in Bonds and Mutual funds. Bonds are debt instruments issued for a period of more than one year with the purpose of raising capital by borrowing. The Government of Ghana has issued some many bonds in the past and is still issuing from time to time. There are 2-years, 3-years and 5 years government bonds available for investors with very good coupon rates.  There are corporate bonds like the dollar bond from HFC bank.

Mutual fund as defined by Investopedia.com is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds in Ghana are managed by most brokerage houses like Databank Financial services, SDC financial services; EDC brokerages firm and so forth. Some mutual funds in Ghana are as follows; IFUND (EDC brokerage ltd.), SAS fortune fund (SAS brokerage), Mfund, Ark fund, Balanced Fund and EPACK (Databank brokerage ltd). Also we have HFC equity fund, HFC unit trust, Stanbic Investment fund, Campus mutual fund, First fund (First bank) and a lot more with various bid and sale prices. These funds have different time horizons and risks profile hence investors with less knowledge about the financial market should seek advice before investing.

Knowing your personal risk tolerance is the key to good investing. Investors assess themselves and know their ability to take risks. Some investments are high risk investment and this means that, the probability of you, the investor losing your principal (initial amount deposited in the investment) is high; also the probability of you making very high gains is high. You would have a high risk tolerance if you have the ability or heart to stand the pressure of losing some or even the entire principal. On the other side, not having the courage to lose a cent is a sign of having low risk tolerance.

My advice is for you is to follow this blog in order to learn more about the financial market and investing as a whole. In the next post, we would look at the other side of the financial market in Ghana which is the money market (short term) investment options.

Keep learning and investing.

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