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Finance & InvestmentTue, 22 Feb, 22

Ghana’s Fixed Income Market Upsurge As It Dominates The Ghana Stock Exchange

Ghana’s Fixed Income Market Upsurge As It Dominates The Ghana Stock Exchange

Ghana's fixed income market, sometimes called the bond market, continued its exceptional performance in the stock exchange surpassing the Ghc108.40 billion in terms of volume traded in 2020 to yet another record increase of about Ghc208.8 billion in 2021.

This resulted in a percentage change of 92.62 percent in the total amount of volume traded in the course of one year. Meanwhile, the value trade also increased to 216 billion in 2021 from the 110.67 billion recorded in 2020. This also recorded a percentage change of 95.21 percent in 2021 alone.

According to the Ghana Stock Exchange, the bond market has recorded its best performing year just after six years of establishment in 2015. The fixed income market has started to outperform the equity market in the shortest possible time.

The Managing Director of the Ghana Stock Exchange, Mr. Ekow Afedzie, speaking during the maiden Breakfast Meeting with the Media said the bond market is becoming way bigger than the equity market, and investing keeps expanding in the fixed income market.

“When you look at it and compare to 2020 you realise that the bond market is doing extremely well, it's becoming way bigger than the equity market as we move on. 334,000 transactions done compared to 182,000 the year before. You look at our outstanding securities and also you look at volume traded between 2020 and 2021 in terms of the government and also the corporate,” Mr. Ekow Narrated. 

Meanwhile, the equity market recorded a market capitalization of 64.5 million just about 18.61 percentage increase while the volume traded recorded 486.59 million which resulted in a percentage depreciation of about 30.03 percent in 2021.

Market capitalization is the market value of all the companies listed put together, in this case, 64.5 billion about 10 billion US dollars went up by 18% in 2021 and this was the highest ever in the history of the exchange breaking the record that was set in 2014.

The Ghana Stock Exchange has hailed this year’s performance as it ended the market's three year of negative returns.

Be it as it may, as the volume of equity traded is marginally decreasing, the volume of debt traded in the stock exchange is increasing with an increasing rate. This is believed to be fuelled by pension funds' investment in the debt market because they consider it to be less risky to invest in.

However, Mr. Ekow explains why the need for fund managers to invest heavily in the equity market and not rely on only Government bonds in the debt market. This he said will help companies to raise funds and also help develop the economy of the country in the long run.

He said pension funds hold almost all the long term funds in the country and when invested in the equity market will make very good returns.

“When you look at the composite index performance of 43.66 percent and even the 20.70 percent of the financial index performance and compared that to your bonds and your T-bills, but most of you sat somewhere not looking at this market, people made as much as 270 percent in this market last year,” he said.

The total value traded in the Ghana Stock Market was estimated to be about GHc533.27 million representing a percentage decrease of 7.30 percent compared to last year.

Despite this decrease, Ghana Stock Exchange is still considered the second-best performing market in Africa.


Source: Abdul-Razak Mohammed (Real Estate Times Africa)

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