Getting into Financial Blogging – The eStock Analysis Story

My desire to know what’s happening every time on the various financial markets in order to invest or advice people to invest properly led me to Blogging and micro-blogging (Twitter ). My type of financial blogging requires an ability to understand what the figures mean with respect to businesses and their financial reports. I have, for some time, now focused on the listed companies on the Ghana Stock Exchange because those companies have given a chance to the public, hence the public deserve to know more about them.

Week in Focus: How stocks performed on the Ghana Stock Exchange (GSE)

New week, new gains, new losses, the GSE did not show any clear direction. On Monday the Ghana Stock Exchange gained some ground as gains in CAL Bank and Mechanical Lloyd Company (MLC) offset losses in two other equities. The GSE-Composite Index closed at 1,036.48 points, from 1,035.97 points and the GSE-Financial Stock Index closed at 872.44 points, up 0.64 points from 871.80 points. A total of 0.35 million shares traded, a 51.39% decline from the 0.72 million shares traded at the previous session. The corresponding trade value was GHS0.10 million, 43.76% less than the previous session.

Tues. 22.05.12: Ghana Stock Exchange: Market Update

Courtesy: CAL Brokers.

In today’s trading, the GSE-Composite Index rose 1.36 points to close at 1,039.28 points. This change brings the year-to-date return to 7.25%. The Financial Stock Index also gained 0.66 points closing at 898.65 points from 897.99 points in the previous session.

Focusing on the Banking sector of the Ghana Stock Exchange (Part I)

The financial sector on the Ghana Stock Exchange includes banking and non-banking stocks. There are seven (7) banks on the exchange, six of which operate in the country and one in Gambia, (Trust Bank ltd, TBL). The banks operating in Ghana include CAL Bank (CAL), Ecobank Ghana (EBG), Ghana Commercial Bank (GCB), HFC Bank (HFC), Standard Chartered Bank (SCB), and UT Bank (UTB).

Let us now look at the various facts & figures behind these banks and how they performed since January 2012 on the Stock market.
I would be concentrating on GCB & HFC in this post.

Ghana Commercial Bank (GCB);

GCB - Bloomberg Chart: Price movement from Dec 2011 to May 2012. 

With market capitalization of about GHS 506.15 million, GCB began the

Ghana Stock Exchange (GSE): Market update for Friday, 11.05.12

Friday GSE Market Update:


Let's look at what happened in the market today. The market closed on a bad note recording losses in four equities. The GSE-Composite Index closed the week at 1,050.34 points from 1,053.65 points. 

GOIL dominated trading for the third time in five successive sessions, the sixth in ten sessions, with 67.79% of the 0.4million shares traded and 58.86% of the GHS0.20million realized.

The corresponding year-to-date change for the exchange is 8.39%. The GSE financial stock benchmark fell 0.99 points to close trading for the week at 908.34 points.

Trade volume and value increased by 51.75% and 93.65% respectively, when compared with the previous session as reported by CAL Brokers.

Aluworks Ltd (ALW), Guinness Ghana Brewery Ltd (GGBL) and Ghana Oil Company Ltd (GOIL) gained a pesewa each to close at GHS0.07, GHS1.76 and GHS0.41 respectively. 

Meanwhile losses were recorded in four equities, PZ Cussons Ghana Ltd (PZC), Tullow Oil (TLW), Total Petroleum (TOTAL) and HFC Bank (HFC).

Analysts predict similar trend in stock prices for next week.

CAL Brokers still recommends Benso Oil Palm Plantation (BOPP) and Enterprise Group Ltd (EGL) for the fourth successive week.

Courtesy: Ghana Stock Exchange & CAL Brokers

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.

2011 Year Review of CAL Bank on the Ghana Stock Exchange.

Overview of Company

 CAL Bank Limited formerly Continental Acceptances Limited and then CAL Merchant Bank was incorporated on March 20, 1989 but the bank was licensed in June 1990 and commenced business in July 1990. With issued shares of 238,802,978, CAL Bank is listed on the Ghana Stock Exchange (GSE) and the share price is 0.23p as at December 6, 2011. We would be looking at how this bank performed on the GSE for the 2011 financial year.
As at 31st December, 2010, the Social Security and National Insurance Trust (SSNIT) held 82,363,074 shares in the bank making 34.13% whiles Mr. Afare Donkor, the largest individual shareholder and second largest shareholder held a stake of 7.51% representing 18,120,000 shares.



Analysis

CAL Bank began the year, 2011 with a share price of 0.33p (04/JAN/2011) and because of investor activities & active trades, share price of the bank rose to 0.39p (04/FEB/2011). Meanwhile, the stock price dropped steadily after that time to close at 0.26p on 22/March/ 2011. Further fluctuation of price was recorded from July to October 2011. Ten months down the year, CAL recorded a Year high of 0.39 pesewas and Year-Low of  0.25 pesewas (p). The volume of trade heightened at the end of October and hence was reflected by an increased in share price by some pesewas.
CAL stock and other financial stocks performed badly in November making the Financial Stock Index remain lower than the Base index of 1000.

The Year 2011 obviously was not the best year for most stocks on the GSE and CAL Bank is no exception.

I would be writing on Ecobank Ghana Limited (EBG) in my next post. I would be reviewing EBG stock on the Ghana Stock Exchange for the Year 2011.

[Courtesy: Ghana Stock Exchange, Bloomberg]

Listing & Trading Rules are set for ETFs on GSE.

Exchange Traded Funds (ETFs) are considered by some financial gurus as an investment product of choice for the inexperienced trader all the way to the professional money managers. In emerging financial markets like that of Ghana, ETFs are yet to see the light of the day. The Ghana Stock Exchange (GSE) announced the introduction of  ETFs in to the market sometime ago and finally, the Securities and Exchange Commission (SEC) has approved the Rules for the Exchange Traded Funds. 
The general listing rules prescribing the requirements for obtaining and maintaining the listing of securities on the Ghana Stock Exchange does not apply to ETFs hence different rules were set for listing and trading. With reference to the Rules for ETFs released this month, trades in ETFs shall be settled through the Clearing and Settlement System of the GSE and Securities Depository System of GSE Securities Depository Ltd just like stocks on the GSE.
This same document revealed that an application for the issue of ETFs must include, Net Asset Value (NAV) of the ETF as at the date of application and the Percentage change of the NAV of the underlying basket of securities / index / underlying asset for the previous 6 months on a weekly basis, among others. The criteria for listing revealed that, the ETFs must be open-ended and fully secured at all times: either by the underlying securities/commodities or financial instruments it represents, a proxy security
acceptable to GSE which should be listed, freely tradable and have adequate liquidity or cash. Looking at the current affairs of the capital market, liquidity issues are very important to the GSE & SEC.
Further scrutiny of the rules showed that, ETF issuers must undertake to compute the Net Asset Value of the ETF on a daily basis and make the NAV public to all market participants at the same time through the GSE. Obviously, no insider trading would be encouraged. The condition for listing stipulated among a list of requirements that, GSE may, in its overriding discretion, grant a listing to an Issuer who does not fulfill the requirements set out or refuse a listing to an Issuer who does not comply with the listing requirements on the basis that, in the GSE’s opinion, the grant or refusal of the listing is in the interest of the investing public.

In terms of pricing the ETFs, the rules stated that, the issue price shall be on a basis approved by the Exchange and shall not include management charges and other fees. Moreover all management charges and other fees are required to be separately specified in the offer Document.

The rules for ETFs are very clear and easy to understand. For more analysis of the essence of these rules, join me on Twitter: peagama (click to follow) or facebook: Patrick .... and let's discuss.
For more details on the Rules for ETFs in Ghana, Click to download full document. (Courtesy: GSE, & SEC).

Year Highs & Lows of Fan Milk Limited on Ghana Stock Exchange

After ten (10) months of trading on the Ghana Stock Exchange (GSE), the Year High of Fan Milk Limited (FML) still remains low comparably, and this is not impressive. Last year, Fan Milk Limited recorded a Year high of GHȻ 10.57 by the close of trading on 10th December, 2010. In that same year, the Year Low of FML as at 10th Dec. was GHȻ 5.55, although GHC 2.5 was recorded on 4th & 5th January. Investors obviously had confidence in the ice cream company and kept trading shares day to day. 

Fan Milk Limited began the year, 2011, with a Year High of GHȻ 2.45 (i.e. on 4th January) and ten (10) months down the road, the Year High was recorded as GHȻ 3.11 (i.e. on 2nd November). October ended with a little tumble of FML share price but November brought a recovery smile as investors gained confidence in the stock. Trading of FML shares on the GSE have been consistent since last week and this is good for the market.

The ice cream company still remains the leading producer of ice cream in the Ghanaian market. Monopoly, people call it, but I call it Supremacy. FML is currently trading at GHȻ 2.53 per share.