The Ghana Stock Exchange Is Crushing It (And Here’s Why)

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.

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!

Making the surge all the more impressive is the fact that the Ghana Cedi depreciated against the US Dollar by over six basis points during the same time period.

To figure out what’s behind Ghana’s bull run, I enlisted the help of my friend, Harrison Tettey-Fio.

Harrison Tettey-Fio
Harrison Tettey-Fio

Harrison Tettey-Fio, Snr. Securities Officer, Standard Chartered Bank – Ghana

I attribute the market’s performance to two factors.

First would be the listed companies’ stellar operating performance during 2012. Of the 16 companies that have reported 2012 results so far, only one has recorded a loss. This has generated a lot of interest; especially in banking stocks, which drive much of the trade volume on the GSE.

The second factor is the implementation of pension reforms which have resulted in more pension fund assets being allocated to Ghanaian equities.

Combine these two factors with the limited float available on the market, and you have a recipe for strong performance.

Let’s dig a little deeper to see 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.

7. CAL Bank (CAL:GN+41.2% (P/E Ratio: 3.9, DivYield: 4.9%)

Shares of this mid-tier bank exploded to a four-year high after it announced 2012 earnings that far surpassed local analysts’ expectations. Net income more than tripled on the back of a 106% increase in net interest income.

A dramatically larger lending book propelled the earnings growth. This bears watching because loans to customers now outstrip customer deposits, which means that interest margins will likely be under pressure going forward. Having so much of its asset base tied up in loans also raises concerns about the bank’s liquidity. Bulls will note, however, that the non-performing loan ratio has dropped to an impressive 5%.

6. Ghana Oil Company (GOIL:GN+42.6% (P/E Ratio: 18.7, DivYield: 1.5%)

It’s not an oil driller, but this operator of Ghana’s second largest network of fueling stations sure did hit a gusher in 2012. The company recorded earnings growth of 32% thanks to a 30% sales increase.

GOIL’s newly appointed CEO has led a renewed push into the ship and aviation fueling markets in addition to carrying out a well-received re-branding exercise.

5. SG-SSB (SG-SSB:GN+44.9% (P/E Ratio: 15.2, DivYield: 5.6%)

A subsidiary of France’s Societe Generale, this bank also crushed its previous year’s results. Earnings soared 34% on a 50% increase in lending and a 37% larger deposit base. Tech upgrades and cost efficiencies resulting from a new centralized office should keep profitability strong in the years ahead.

4. FAN Milk (FML:GN+46.4% (P/E Ratio: 22.5, DivYield: 3.8%)

One of my personal favorites, this ice cream purveyor delighted shareholders with an earnings gain of nearly 44% for 2012.

I mean, really, what’s not to like about a company that employs at risk youth on bicycles to sell frozen treats to a population with rising income in a place as hot and humid as Accra? Oh, did I mention that the company has zero long-term debt and churns out wads of cash?

More, please.

3. Ghana Commercial Bank (GCB:GN+46.7% (P/E Ratio: 9.2, DivYield: 2.3%)

Ghana’s most ubiquitous bank celebrates its 60th anniversary this year and has fittingly posted blowout stock price gains to mark the occasion.

Thanks to a recent development that freed up a huge chunk of the bank’s assets that had been previously been tied up in an ill-fated loan to the Tema Oil Refinery, GCB is back in the lending business. Over the most recently reported 12 months, it nearly doubled its loan book.

Much of the new lending has been directed to the retail sector, specifically government workers who comprised the bulk of GCB’s customer base and were recently awarded a 20% pay increase.

2. Ecobank Transnational (ETI:GN) +49.1% (P/E Ratio: 5.3, DivYield: 4.3%)

Photo by Adam Cohn
Photo by Adam Cohn

Shareholders of ETI, Africa’s largest bank in terms of geographic footprint, cheered its 48% profit boost through the first nine months of 2012. But that might be only the start of the fun.

CEO Thierry Tanoh recently announced that he expects customer deposits to grow 20% in 2013 as the bank rolls out its operations throughout the Sub-Sahara. He also forecast annual revenue gains of 15% between now and 2015. That’s not bad for a company that trades at a paltry 5.3x trailing earnings.

Looking for exposure to ETI but don’t have a Ghanaian brokerage account? Consider the South Africa-based NedBank Group (NDBKY:US), which holds the rights to a 20% stake in the company.

1. Benso Oil Palm Plantation (BOPP:GN+78.9% (P/E Ratio: 6.6, DivYield: 2.7%)

I remember being at a complete loss as to what an “oil palm” was when I first came across this company. Palm oil, it turns out, is an edible oil and an increasingly popular substitute for trans-fats. It also serves as a decent biodiesel.

BOPP shares soared when its parent company, Wilmar International, announced that it would soon open West Africa’s second-largest palm oil refinery in Ghana. The development should widen BOPP’s profit margins.

In spite of its nearly 80% price gain, the stock still trades at less than seven times trailing earnings.

Are You a Ghana Bull?

So, the Ghana bourse has had quite the run-up, but, as we’ve seen many of them still trade at attractive valuations. Do you invest in Ghana? If so, let us know what you think the remainder of the year holds in store in the comments!

[Disclosure: I own shares of FAN Milk, Ghana Oil Company, and Ghana Commercial Bank.]

Related Articles

How to Invest on the Ghana Stock Exchange

Ranking Ghana’s Best Banks

Investing In Ghana’s Booming Banks


14 thoughts on “The Ghana Stock Exchange Is Crushing It (And Here’s Why)”

  1. Hi Ryan

    Can you let me know of any technical analysis/charting software that has the Ghana Stock Exchange as well as the Nairobi SE.. i use metastock which does not have these exchanges on them


  2. Hello Ryan,

    I am really impressed with what you are doing about investing in Africa. You approach issues with high level of professionalism. I read your article titled “The 10 Best African Stocks of 2012” and it is awesome. Thanks a lot for this.


    1. That’s very kind of you, Marcus. I’m glad you find the site helpful. If you should have any questions about anything you read, please don’t hesitate to ask them in the comments.

      Thanks for stopping by and happy investing!

  3. Hello Ryan,

    First of all thank you for this blog, it is very well done and extremely informative.

    I wanted to ask how you go about investing on these African stock exchanges? For a U.S. citizen I assume it is very difficult (because the U.S. government makes it that way), and are there liquidity issues with the stocks and currency conversions? What about opening a local bank account and then trusting a broker thousands of miles away to properly handle your investment?

    Again, thank you for your site.


    1. Hi Don,

      Check out the web link above, Imara has recently launched a retail platform for individuals looking to buy shares across the continent through a single point of contact. Have a read and let me know if you are interested.



  4. Hello Ryan –
    I have to agree that the future for Ghanaian stocks is still bright. I don’t own stocks there yet but the prospects are quite appealing provided one can be at ease with a little volatility. Banks stocks are the winners knowing the need for financial services to come. I especially like Fan-Milk. (I am not alone. A private equity firm has also invested in the company.) As you said, little or no debt, positive cash flow, and in a sector where there’s a huge need everywhere in Africa: food. Finally, depending if you’re a long-term investor or a speculator in the markets, these stocks can be tremendously profitable.

    1. @augue, the historical contributions are yet to be released into the market by the NPRA, however, part of the tier two contributions are currently being invested in the stock market.

  5. I want to point out that one cannot find any stock listed on Ghana Stock Exchange on Bloomberg anymore. It seems Bloomberg has severed some ties with the GSE. The only data available is the listing on GSE Composite Index (GGSECI) which comes with inadequate figures and graphs and does not indicate accurately what is happening on the stock market.

    However, I’ve developed an API that pulls market data and company information on the Ghana stock market directly from the GSE’s website. Software developers can build apps against it to provide real-time trading information on the exchange to investors. More information about the API can be found here:

    I hope it proves useful.

    1. Fantastic, Michael. Many thanks for posting.

      Yes, Bloomberg seems to have put GSE (and other frontier African markets) data behind a pay wall. Short-sighted of them, in my opinion.

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