The Deputy Managing Director of the Ghana Stock Exchange, Mrs. Abena Amoah, indicates that her outfit is committed to upholding high standards to ensure that only best performing firms get listed on the local bourse.
Mrs. Abena Amoah made this statement in an interview following the delisting of some companies from the Ghana Stock Exchange since 2017.
Apart from Mechanical Lloyd and PZ Cussons, who voluntarily delisted from the Ghana Stock Exchange, the other companies including, Pioneer Kitchenware, African Champion Industries, Golden Web, Transactions Solutions Ghana, and UT Bank got delisted compulsorily.
Speaking on companies delisting, Mrs. Abena Amoah intimated that the main focus of the local bourse is to protect the interest of its investors. Also, it creates an enabling environment for businesses listed to thrive, as well as allow delisted companies to return after they’ve reorganized their operations.
“We are here to ensure that investors are protected and to ensure that companies that raise capital from the market meet their obligations. We will always work with the companies towards meeting their financial reporting obligations, but if they consistently default, we will facilitate their delisting, and give them an opportunity to correct any anomalies and return to any of our markets, be it the main market, the Ghana Alternative Market (GAX) or the Ghana Fixed Income Market (GFIM).”
Madame Abena Amoah, sharing her thoughts on the decline in the Ghana Stock Exchange Composite index (GSE-CI), which reflects the average performance of shares of listed companies, urged local and international investors to develop a long-term view when it comes to investing in companies on the Ghana Stock Exchange in order to reap the inherent benefits.
The Ghana Stock Exchange Composite Index (GSE-CI), a key performance indicator of stocks on the local bourse, has recorded a year-on-year dip of about 19.8 percent in its growth.
The drop in share price valuation of companies does not necessarily reflect its robustness. Investors are supposed to develop confidence, the Deputy Managing Director opined.
“Today at the GSE, we are even stronger now than we were 10-years ago when we didn’t have the debt market. So, you as an investor, when you come unto our market, you have the opportunity to invest in debt or invest in equities. Many times, we chase only the short-term gain without keeping an eye on the long-term benefit. In the short-term, prices can drop. It doesn’t mean the company is a bad company. It just means that it’s an opportunity to buy shares at a cheaper rate than you would on a normal day. For sure, [in] the same way, prices go down, they would go up.”
The Head of Research at Databank, Alex Boahen, commenting on the increasing number of companies delisting from the Ghana Stock Exchange (GSE), revealed that “the reason why investors invest in companies is because they want the companies to be profitable so that they can pay dividends to them. They want their share prices to actually appreciate on the market so that they can make capital gains when they sell their stock. But if you look at it recently, these companies have actually failed to deliver both dividends and also share price appreciation and, it stands to reason that when it gets to a point, it’s probably in the interest of the shareholder and investor community for these companies to actually go off the market so that they can leave the public spotlight and then they can re-strategize and when things actually improve they can always come back and apply and list on the market again.”
Companies still listed on the local bourse should strengthen their corporate governance systems as well as improve their operations to avoid being delisted, Alex Boahen advised.
Also, other businesses that have intentions to be listed on the Ghana Stock Exchange should consider listing on the Ghana Alternative Market, GAX, to avoid the strict compliance standards of the main market, he added.
