The Ghana Stock Exchange
The Ghana Stock Exchange is the principal stock market of Ghana. It was established in July 1989 and began trading in 1990. At present, the Ghana Stock Exchange lists 42 equities and two corporate bonds. It is a diversified stock market, meaning that all types of securities are listed on it. This makes it ideal for people interested in investing in the Ghanaian economy.
This paper studies the role of automation in a new market, namely, the Ghana stock exchange (GSE). The introduction of an electronic trading system on the GSE has improved the market’s tempo and liquidity, thereby attracting foreign investment and increased investor confidence. The automation process has also improved the settlement of interbroker money. And, as a result, the number of trading activities has increased.
The Ghana Stock Exchange transitioned from floor trading to automated trading in June 2009. This new system operates an auction market and an up-to-date market for commonly traded securities. The study used secondary data from the GSE website and its online database. It found that the new system had a positive impact on several stock market indicators, including liquidity, market transparency, and income.
Limitations on non-resident investors
There are limitations on the number of non-resident investors on the Ghana stock exchange. Foreign investors can invest in only ten percent of a company’s equity without obtaining prior exchange control permission. In addition, there are restrictions on portfolio investors who are not resident Ghanaians. These limits restrict foreign investors from holding more than seventy-four percent of a company’s equity. These restrictions do not apply to Ashanti Goldfields shares, which are exempt from the limits.
The new laws make the process of registration easier. They remove some of the requirements, such as the requirement to state business objectives. They also broaden the role of the company secretary. The company secretary must have a background in company law and have been trained by a company secretary for three years. In addition, non-resident investors need to obtain a certificate of capital importation. This process can take up to fourteen days. Once the certificate is issued, the local authorized bank must confirm the transaction with the Bank of Ghana.
Lack of credit rating agency
Ghana’s stock exchange has been struggling for years to attract more companies. Some companies are not willing to open their books to the public. As a result, fewer than one percent of Ghana’s GDP is captured on the bourse. This has forced domestic banks to find other sources of capital.
In an effort to restore investor confidence, the Ghana Stock Exchange is now working on the process of establishing a credit rating agency. The agency is expected to be operational by the end of the year. This rating agency will evaluate the issuances of investors in the market.