a field guide to African stock markets
What’s gotten into the Ghana Stock Exchange?
The MSCI Ghana Index has soared of late. It’s now 37% higher than it was at the beginning of the year. Think about that. That’s 37% in just over two months!
Let’s see what’s behind the rally and which stocks have done the most to drive the market higher. The following is a countdown of the top seven performing Ghanaian stocks and their US Dollar-adjusted gains.
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Last week we crunched the numbers of some Nigerian banks, analyzing their profitability, growth, risk, and value to separate the gems from the junk. I hope you got as much of a kick out of the exercise as I did, because we’re going to do the same thing again today. [...]
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Much has been made of Africa’s rapid economic growth. And it truly is remarkable. The IMF projects that seven African economies will grow faster than 8% this year, and six of the top ten fastest-growers economies in the world will come from the continent.
Unfortunately, investing solely on the basis of growth forecasts often ends in disappointment. Rapid economic growth doesn’t necessarily translate into awesome stock market returns.
To get a true sense of where investment opportunity lies, we need to combine growth’s yang with the yin of value.
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I opened a trading account through a Ghanaian stockbroker about five years ago. While the broker has executed all trades that I’ve asked them to complete, I have reservations about referring them to my clients here. Their service has been adequate, but far from outstanding.
So I compiled a list of stockbrokers who trade on the Ghana Stock Exchange and emailed each of them. I asked them if they catered to foreign investors and, if so, how much they required in order to open an account. Of the 20 brokers that I contacted, I found the following four brokers to be especially helpful and responsive.
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I believe one of the best ways to tap into Africa’s high-growth economies without exposing yourself to excessive risk is by investing in a well-managed, local bank. African banks’ operations are generally easy to understand. Their balance sheets are refreshingly free of exotic derivatives. For the most part, they simply take in deposits and make loans. It’s banking at its simplest.
Ghana’s banks have enjoyed a purple patch in recent years due to a combination of rapid economic growth and tight fiscal policy. The government expects to post 9.4% economic growth this year thanks to oil revenues – making it one of the fastest-growing economies in the world.
So, which banks are providing the capital for this remarkable expansion? Here is a roundup of the most prominent ones listed on the Ghana Stock Exchange.
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Coffee Junkie. Air Guitarist. Number Cruncher. Sometime Jogger. Labrador Wrestler. Former Partner, Kivuno Capital Management. Editor, InvestingInAfrica.net. Read More.