Some financial analysts and brokers at the Ghana Stock Exchange (GSE) have blamed the low acquisition of shares of performing listed companies on competition from the Money Market.
According to them, investors are risk averse; hence, will choose markets that are certain with returns on investments such as bonds, which promise over 25 percent returns per annum.
In recent times, CAL bank which has consistently posted good performances on the Stock Market has received low share price.
Speaking to Citi Business News after the presentation of the “Facts Behind the Figures” at the GSE, the Managing Director of CAL bank, Mr. Frank Adu Junior explained that with the current stability of the Cedi, investors will respond to the demands of the markets by moving away from speculative equities, particularly when a company’s future performance cannot be predicted.
“When returns on fixed income products are low then money is moved from the fixed income market to the equity market , when returns on the equity market become uncertain and fixed income is certain, then the reverse flow happens”, he said .
Mr. Adu, who expressed no surprise at the turn of events, explained that with T-bill hovering around 25 percent it is reasonable for investors to move towards the bonds market.
Touching on the contributory factor of the cedi, he stated that investors are currently feeling comfortable and confidence to invest in T-bill where they can make some fixed returns as opposed to investing in a speculative equity.
“To the extent that today we have 25 percent returns on T-bill and the cedi is stable then effective they will look to the fixed income market and know how much they are doing on the dollar market”, he said.
Mr. Adu maintained that uncertainties in the Stock Exchange are also a major contributory factor for performing listed companies having low share price.
He was of the view that the financial performance of CAL bank was indicative of how the bank was managing its assets efficiently to make it profitable.
In one its performance for the first quarter of 2016, the bank was able to reduce its non-performing loans to 5.5 percent, making it the best under the category.
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By: Lawrence Segbefia /citibusinessnews.com/Ghana