The Ghana Stock Exchange GSE has attributed its poor performance in 2015 to the power crisis and the cedi depreciation.
The Ghana Stock Exchange was one of the poor performing exchanges in Africa last year.
Figures from the GSE reveal that the exchanges’ Composite Index registered a negative return of 11.77 percent in 2015 compared to the 5.4 percent positive growth it recorded in 2014.
GSE boss Sam Mensah at the AGM
Also, market turnover in 2015 was lower than the previous year as the volume of shares traded for the year stood at GHC246 million valued at GHC247 million.
Speaking at the Annual General Meeting of the GSE, the chairman of the Council, Dr. Sam Mensah stated that “nearly all the manufacturing companies on the GSE reported losses or heavily decreased profitability in the last year due to the power crisis”.
“The market conditions have not been very conducive particularly in terms of the macroeconomic environment.
We all know about the energy crisis.
The energy crisis has taken a serious toll on the manufacturing sector of the economy,” he said.
He stated for example that almost all the manufacturing companies on the GSE recorded losses due to the harsh macroenvironment.
“Nearly all the manufacturing companies on the GSE reported losses or heavily decreased profitability in the last year,” he said adding that many of the companies were however optimistic the situation may improve as government fixes the energy situation.
According to Mr. Mensah, it is important for government to consolidate its fiscal policies in time to allow the private sector have some space to grow since government is the single major expender in the economy.
He stated that the market managed to record a surplus of GHS 2.55 million in 2015 lower than the GHS4.18 million in 2014 although the 2014 surplus included an exceptional item of GHS2million.
Touching on the cedi, he stated that the 15.7 percent depreciation of the cedi against the US dollar was a major challenge for industry sector in general, and the private sector in particular.
“The Bank of Ghana prime rate increased from 21 percent in 2014 to 26 percent in 2015. This coupled with high inflation and high interest rates undermined economic activity in the country,” he said.
Linking the figures to the country’s overall performance in 2015, Mr. Mensah stated that it reflected in a fall of GDP growth from 4 percent in 2014 to 3.9 in 2015 which was mainly due to drop in agriculture sector growth from 4.6 percent to a mere 2.4 percent in 2015.
Market performance
The volume of shares traded for the year stood at GHC246 million shares valued at GHC247 million compared to the volume and value of GHC207 million and GHC346 million respectively recorded in 2014.
The market capitalization for all listed securities at the end of December 2015 was GHC57.1 billion compared to GHC64.4 billion in 2014, representing a decrease of 11 percent.
Domestic market capitalization fell by 19 percent ending December 2015 at GHC.11.2 billion compared to GHC13.9 billion at the end of December 2014.