GSE 1H market performance encouraging

Stock Market Review shows that for the first half of the year showed rising share prices and market analysts describe the results posted so far as "encouraging".

In the 39 trading sessions, volume increased by 66 per cent over the same period for 2001, just as value also shot up by 59 per cent over the same period. For volume, the biggest contributors were: Ghana Commercial Bank, British American Tobacco (BAT), Unilever Ghana Limited (UNIL) and Home Finance Company (HFC).

For Value GCB Standard Chartered Bank Limited, Unilever and BAT Ghana Ltd were the biggest contributors.

The price appreciation of four listed firms during the period under review gave a major boost to market capitalisation. The companies are:

During the period, Ghana Breweries dipped ?100 while Pioneer Aluminium factory also dipped ?50. All other equities appreciated in prices except Ashanti Goldfields Company and CFAO that maintained their December 2001 prices.

Market Performance

The total volume and value was 32.5million and value as ?59.3 billion as against 19.6 million and ?37.4 billion for 2001.

Market Capitalisation

(Market Cap) This rose from ?3,904 billion at the beginning of January, 2002, to ?4,429 billion at the close of June, 2002, an increase of ?525 billion or 13%. The increase in the market capitalisation was mainly due to price appreciation?s in four of the listed equities as indicated below:

The Index was up from 955.95 points at the beginning of January, 2002 to 1,223.69 points at the close of June, 2002, recording a gain of 28.01per cent. The price appreciation?s in Ghana Commercial Bank, SSB Bank and Unilever Ghana Ltd shares were the main factors responsible for the index gain. The gain in the index, even at the half-year rate, was above the prevailing annual interest equivalent to 91- day treasury bill of 24.61per cent at the end of June, 2002. It was also above the May, 2002, 12 months inflation rate of 14.3 per cent.

Corporate Operating Results & Share Price Performance

Corporate results reported during the period for the year ended December, 2001 as well as the half -year to June, 2002 were impressive.

The strong performance by the listed companies sparked off a bullish run in share prices giving the market a very good half-year return of 28.01 per cent. The trend, we hope, will continue, albeit at a slower pace than has been witnessed in the first half year. Top of the gainers in share price appreciation?s were Ghana Commercial Bank Ltd - 105.2 per cent gain; Mechanical Lloyd Co. Ltd, 75.9 per cent gain, Fan Milk Ltd - 70 per cent gain; SSB Ltd - 68.2 per cent gain; PZ Cussons Ghana Ltd, 60.4 per cent gain; Unilever Ghana Ltd, 48 per cent gain; BAT Ghana Ltd, 47 per cent gain and Enterprise Insurance Co. 38 per cent gain for the first half of 2002.

Corporate Bond Trades

HFC Bonds of a face value of US$249,750 were traded during the half-year compared to US$354,883 for the same period in 2001. The prices and yields at the end of June, 2002 were: B, 101 with 6.93 per cent yield; C, 100.5, yield 8.21per cent; D, 100 yielding 8.25 per cent; E, 100 with a yield of 8.00per cent; F, 100 with a yield of 6per cent; and G, 100per cent with yield at 8per cent. While HFC Series F is denominated in pound sterling, the rest are in US dollars. Govt. Bond Trades There was a transaction of ?20 billion in the Government of Ghana Index-Linked Bonds (GGILBs) during the period under review. The GGLIBs are three years inflation-protected Government of Ghana bonds, which will be repaid by the Government of Ghana in 2004. Interest is payable semi-annually at a real rate of 5-6%. The principal and each interest payment will be adjusted in line with changes in the Consumer Price Index (CPI) to take account of accrued inflation after the GGLIBs are issued. Total GGILBs issued January in June 2002 came to ?242 billion bringing the overall issued amount as at June 2002 to ?1,288 billion.

Major corporate actions

1) Home Finance company (HFC) Rights Issue: HFC through Databank Brokerage Ltd (DBL) has issued a circular for a Renounceable Rights Issue. In all, 28,576,278 shares are being offered at a discounted price of ?780 per share (market price ?955). Existing shareholders are getting one new share for every two existing shares. HFC intends to raise ?22 billion to, among other things, expand into commercial banking, add commercial mortgages to its current core business and also do construction financing of homes/commercial property for its customers. Ashanti Goldfields Co. Ltd (AGC) Cash Redemption of Notes: AGC, under a new proposal for restructuring put forward by Lonmin for early cash redemption of Notes, has issued and listed 13,945,122 ordinary shares. It is expected that AGC will within 18 months, do a Rights Issue to give all other holders, the same opportunity to participate in the recapitalisation of the company as was offered to Lonmin and the Ghana Government.

Produce Buying Co. Ltd?s (PBC) 1st AGM: Produce Buying Company (PBC) held its first Annual General Meeting at the Trade Fair Site (Pavilion E) on June 28, 2002. The meeting, among other things, adopted the audited financial statements for the years ended September, 2000 and 2001; and confirmed the appointment of all persons nominated recently as Members of the Board of Directors of the Company.

Prospects

In the near term, we expect Government?s privatisation of Cocoa Processing Company Ltd to hit the market. Ghana Government is expecting to sell 25 per cent of its stake in the company through the local Exchange. Hopefully, that will pave the way for a much faster divestiture of Government holdings in some other companies.

A few privately owned companies are also making preparations to list. These developments should make investors look forward to an exciting period ahead for the market.