A report published by the Ghana Stock Exchange (GSE) indicates that the value of debt and equity security holdings held by foreign investors in the country increased significantly in 2021 by more than one billion Ghana cedis.

According to the report, foreign investors’ debt holdings increased substantially from GH₵28.8 billion recorded at the end of December, 2020 to GH₵31.7 billion at the end of December 2021.

The value of foreign investors’ equity holdings also increased to GH₵6.32 billion at the end of December 2021, from GH₵4.82 billion at end-December 2020. Meanwhile, the significant increase in the debt holdings of foreign investors put excessive pressure on the cedi anytime there is a shock to the economy.

The increase, the report indicated, was attributable to the rise in prices of equities on the domestic market, partially owing to the stock market recovery from the impact of the Covid-19 pandemic.

Total Value of Government Debt Securities

The report further stated that the total value of Government of Ghana’s (GoG) and corporate debt securities outstanding increased in 2021, as compared to the previous year. The total value of Government of Ghana and corporate debt securities outstanding as of the end of 2021 were GH₵152.72 billion and GH₵31.36 billion respectively, compared to GH₵120.69 billion Government of Ghana and GH₵ 27.07 billion corporate bonds outstanding in the previous year. This represents an increase of 26.5 percent and 15.9 percent for Government of Ghana and corporate bonds, respectively.

The market share of outstanding securities for GoG and corporates was 83.0 percent and 17.3 percent respectively in 2021. This is compared to 81.7 percent and 18.3 percent respectively in the previous year.

However, the situation is different this year 2022, where foreign investors reduced their holdings in Ghanaian securities, as domestic investors have taken over the bond market on the Ghana Stock Exchange.

The situation in this year is as a result of US Federal Reserve and other treasuries raising their interest rates, which held back huge inflows to emerging economies around the world of which Ghana is no exception.

According to the Head of Ghana Fixed Income Market of the GSE, 78 per cent of the market is currently held by locals, while the remaining 22 per cent is held by foreigners.

When the Bond Market was created seven years ago, the market was dominated by foreigners, which held 70 per cent of the market. But the recent domination of the Bond Market by Ghanaians hold good prospects for the country as it promotes financial inclusion, give the citizens the opportunity to contribute to the financial needs of the country, help the public to diversify their investment portfolios, as well as help ease pressure on the local currency.