Investors get richer as Ghana Stock market records win again & again

The stock market returned 0.36% at the close of trading today, following gains in five equities. The GSE-Composite Index and the GSE-Financial Stock Index closed at 2,275.74 points and 2,100.02 points respectively. The 8.15 points leap in the market benchmark pushed the year-to-date return to 34.73%.

A total of 0.76 million shares were traded for GHS1.16 million. Trade volume and value doubled compared to trades from the previous session respectively. TOTAL dominated trading with 51.45% of the shares traded and 75.26% of the total trade value.

EGL reached a new year-high after gaining GHS0.22 to close at GHS2.90. Other gainers were CAL, GCB, GOIL, and UNIL. UTB was the sole loser.

Courtesy- CBL Research

Testing the Market with iBroker Trading Platform

I’m back to using iBroker trading platform to trade my stocks on Ghana Stock Exchange. This only means, I am saying Goodbye to Databank Brokerages. #Boysabr3.
Now I’ll put my own stop loss orders, Set my limits, trade more faster, move more funds into my brokerage account faster online than going to my brokers’ office to deposit the money in my account as I used to do with my former brokers, Databank.
In order to be able to move funds into my new brokerage account with CAL Brokers faster, I want to open a CAL bank account in which I will transfer funds to from my Zenith Bank Account on monthly basis. I believe with the iBroker platform, I can easily transfer money online from my savings account at CAL Bank to the brokerage account. Another good but slower way is to move money straight from my Zenith Bank Account to my CAL brokerage account. I still don’t understand why it should take a day or two for that transfer to go through. Incredible Ghana. #GhanaAbr3.

Some of today’s Trades on the GSE
Courtesy:  iBroker platform

Which brokerage firm is the best? What fees do they charge? What do they offer? #AskPEAGAMA

Photo credit: Databank
Below are my responses to an investor’s questions about brokerage firms in Ghana. 

“Dear Edem,
My name is James Kofi Bond, a Ghanaian currently living in the US. I came across your blog a couple of days ago and have been reading your articles.
I am writing to you because I have been thinking of investing in some equities on the Ghana Stock Exchange (GSE) and was wondering if you could recommend some brokerage firms back home that cater for an investor resident abroad. In addition, would you be kind enough to share your experiences/reviews using some of the brokerages in Ghana. Are you satisfied with services you receive or have received have you had any major issues? Were there any surprises once you started using their services, or did everything go smoothly as you expected?
Below are guidelines I would like to consider before I make any commitment and I would appreciate it if you could offer your thoughts on each of the guidelines. Feel free to add to the list if I miss anything.
1. What is the name of the firms that you would recommend? Are they full-service brokers or discount brokers?
Ans: I would recommend Databank Brokerage, CAL Brokers and Ecobank Capital simply because I have experience with them and likes what I get from them. And Yes, I they are full-service brokers
2. What documents are required to open an account? Should the documents be notarized?

Ans:   They are basically, your IDs/ passport, two passport-sized pictures (individual). Corporations have a list of items to provided. I’ll advice you visit their websites to get a more specific information.
3. What is the minimum amount required to open an account with the firm?
Ans: The minimum amount is dependent on the type of the account you want to open with these brokers. But basically there is no specific amount required if you want to open a GSD account (this account is required of anyone who want to invest in stocks or securities on the GSE). Brokers would make you open this depository account. 
4. What type of account does the firm provide? Margin account or cash account?
Ans: Most of the firms if not all provide Cash accounts. I don’t know of any where securities in your account act as collateral for a line of credit that you take out from the brokerage in order to buy more stocks.
5. What sort of operational online facilities does the firm provide? 
*Can the firm’s website be navigated easily and does it run all the time without any technical difficulties? YES,
*Would a client be able to place buy and sell orders online. 
Ans: NO except for i-broker services offered by CAL Brokers. I don’t know if Databank Omni trader service is functional. Check their websites for more about that. Other brokers are advancing to offer these services. 
*What other options are available if I cannot place online orders?
Ans: Place order by going to their offices (advisable) or place by calls or fax.
*Do they offer alternatives like talking to a broker over the phone, or faxing and do those alternatives come with an extra fee? 
Ans: Yes they offer and NO they don’t come with extra charges.
6. How often or frequently does the firm update information on their website and particularly, information regarding client portfolio?
Ans: Very Often and they do provide real time updates. Clients cannot access their portfolio online unless they use the online trading platforms offered by some brokers like CAL Brokers, IC securities, Databank, but clients can get statement via emails from time to time or as and when they request it.
7. Fees/Expenses: 
*What fees are involved?
*How much does it cost to place orders? Is that sliding scale based on size of the trade, or a flat rate? Are there separate fees for buy and sell orders.
* What about taxes?
* Also, do they charge account maintenance fees or account closing or transfer fees? 
*Will an inactivity fee be charged if the account remains idle for certain period of time? Do additional services bring with them additional expense?
* Do you have a complete list of charges associated with client accounts?
Ans: As provided by the SEC rules,
 1) Subject to section 4 of the Securities Industry (Amendment) Act, 2000 (Act 590), a levy in respect of investments in securities referred to as a transaction levy shall be charged on each purchase and sale of securities listed on the stock exchange or any other trading system approved under the Law.
(2) The transaction levy shall be paid by the purchaser and seller of securities.
(3) The transaction levy shall be charged on the purchase and sale as follows:
(a) for shares, 0.15% of the total transaction value;
(b) for securities other than shares, 0.15% of the total transaction
value, where the transaction value is less than or equal to ¢500
million; or
(c) for values greater than ¢500 million, the levy shall be 0.05% of
the transaction value; and shall include such other rates as the Commission may from time to time prescribe.
(4) The rates shall be charged to brokers commission and the Ghana Stock Exchange Levy and shall be applied as follows
(a) For Shares 0.05% from the broker’s commission and 0.10% from the Ghana Stock Exchange Levy.
(b) For securities other than shares 0.05% from the broker’s commission and 0.10% from the Ghana Stock Exchange Levy for transaction values up to ¢500 million and for values greater than ¢500 million the 0.05% shall be from the broker’s commission.
8. Who would control decision-making in my account? What are their backgrounds and experience of the firm’s brokers?
Ans: You can open discretionary or non-discretionary accounts for some but for most brokers, it’s discretionary, meaning you would control your own decision-making. Moreover, Stock brokers & fund managers are licensed, well-trained to understand the market and manage your accounts.
9. How quickly does the firm process client orders?
Ans: ASAP. Most brokerage firms especially the above mentioned ones process client’s order as soon as the orders come in. However, that does not mean the bid or sales would be made, the market forces, determine that.
10. Do they offer research notes/market research or investment recommendations tailored towards clients needs, or will I receive the same research notes as the broker’s other clients receive? Also what type of research does the company provide and what is the quality of the research?
Ans: Databank, CBL and some of brokerage firms provide quarterly researches and but do not provide client tailored research notes unless requested. CAL Brokers ltd provides recommended stocks for investors in their daily market updates. Others also do same on their various platforms.
 11. How does the firm communicate with clients? 
*Will I be able to receive contract notes and account statements? Ans: YES
* How often does the firm provide statements and will they be online or in paper? 
Ans: Monthly or Quarterly or upon request from some brokers. It defers.
*Who do I contact if I have a question or concern regarding my account?
Ans: Speak to their receptionist, they would direct you. (Meanwhile, note: Receptionists are not brokers …Click to read. )
* What are different ways that I can contact my account representative or his or her manager? Phone? Email?
Ans: Email (preferable) and phone (depending on your relationship with the firm)
12. How does the firm manage a client’s uninvested cash? Does the firm offer an interest on uninvested cash that is sitting in the account?
Ans: Differs from Broker to Broker, you should ask them we you want to deal with them
13. Will I be able to wire funds into my account via internet banking? If yes, do they have any banks in the US? 
Ans: Yes. And they do, most if not all have international banks they deal with. You just have to enquire and get the necessary directions.

14. Will my securities be registered in my name, or in the name of the firm? Can you explain the differences between the two and the advantages and disadvantages of the two.
Ans: Your securities would be registered in your name. The advantage is that, you would have the chance to use them for anything, like collateral security to obtain loans, etc. Most of the time when this is so, you have the discretion to sell or buy more at your own time hence there is a higher risk involve since you may not be an expert in the market as the brokers are. In the case where securities are not registered in your name (rear), those securities cannot be used as collateral for obtaining loans etc. You may enjoy the expert services of the brokers when they make the investments/trades on your behave. (Mostly through mutual funds or unit trusts).
15. What kind of protection does the firm offer to customers in case the firm becomes insolvent. 
Ans: The Securities and Exchange Commission and the Ghana Stock Exchange has rules protecting investors in terms of insolvency of the firm.
16. Customer Service: How would you rate the firm’s customer service. Is someone readily available to speak with a client?
Ans: Rate: 8 out of 10. Available?: YES but sometimes when clients are a lot, as in the case of Databank, you would have to talk to the receptionist and later join the queue when need be.
These are my answers to questions posed by the investor. I hope they help him in his quest to find a good broker. You may also share your experiences with the market participants in the Ghanaian market. 

Market Participants: List of Stock Brokerage Firms in Ghana

Most people have been asking me about who to contact if they want to start an investment. I have realized that most people in Ghana do not know who to contact or where to go in order to buy shares of companies listed on the Ghana Stock Exchange. I must admit that, some brokers in Ghana do not approach people to talk to them about investments or contact potential investors.
Moreover, people are very ignorant about the various investment instruments that exist in these brokerage firms. It is bad for the growth of the market.
So, I have decided to list the various broker/dealers in the Ghanaian financial market and their websites or locations. I believe this would help some potential or young investors to know where to go, or who to talk to.

As listed on the Ghana Stock Exchange’s website, these are some market participants (Licensed Dealing Members );

Please follow the links above to find more about these Market participants or Brokerage firms. There are other market participants like Custodians, Registrars and Government Securities Dealers. The link to the Ghana Stock Exchange website would help you find out more.
Don’t forget to come back to this blog. eStock Analysis Blog would always get you the information you need to be a better investor.
You can always ask questions or leave a comment, I’ll gladly answer or help you find the answer.

Keep investing..

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Taking a closer look at Unilever Ghana Limited (UNIL)

Today, I want us to focus on Unilever Ghana Limited (UNIL) and it’s performance in 2011 and in the year so far. In my earlier post about the 1st Quarter of the Manufacturing sector, I wrote on the current standing of the company on the exchange. 
UNIL: 1st Quarter Chart on GSE: (courtesy; Bloomberg & GSE) 

We would look at more figures and how investors are reacting. UNIL as we know, manufactures and markets consumer goods throughout Ghana some of which includes toilet soaps, personal products, detergents, and consumable food products.

This year, UNIL began trading at GHS 6.64 (03.01.12) per share on the exchange. UNIL has issued about 62.50 million ordinary shares on the Ghana Stock Exchange (GSE) with market capitalization of GHS 509.38 million. As released by the exchange, UNIL records a dividend yield (%) of 5.89. It was also recorded a price per book value from the most recent quarter as reported by Bloomberg as 8.6373. 
Investors reaction to the stock on the exchange has not changed so much. The shares are trading from time to time and most of the time as odd lots. As at today, the price remains at it’s year high of GHS 8.15.

UNIL reported in March 2012 that it has made a revenue of GHS 239,005 for the 2011 financial year. In a press release to the Ghana Stock Exchange, it reports a profit after tax for the year as GHS 30,115, an increased of the one for 2010 which was GHS 17,947. Shareholders equity increase from GHS 41,340 to GHS 48,893.(NB: all figures are expressed in thousands of GH cedis unless otherwise stated)

UNIL would be having its Annual General Meeting on 27th April 2012 at the National Theatre. Shareholders are advised to go and contribute to the discussions and also vote on issues. Moreover, the company has proposed a dividend per share of 0.4800 pesewas which has a qualifying date as 25th April, 2012.
We hope to keep our eyes on UNIL and it’s affairs in the household & consumer products sector.

Relationship Managers & Receptionists are not Stock Brokers. Talk to the right person.

 I have been observing this for some time now and I think it is getting on my nerves and moreover, investors are losing money because of this issue. I have been a victim and it was due to my ignorance. Don’t make the same mistake. Some thing must be done. The Securities and Exchange Commission must act now to protect investors.

To many people in the Ghanaian financial market, everyone that works in a brokerage firm or with a Licensed Dealing Member (LDM) is having a good knowledge about the market or is a stock broker (Authorized Dealing Member). This misinformed public perception is reinforced by some ordinary workers at some brokerage houses who give their misleading recommendations about stocks on the market to ignorant investors. They speak so fluently and courageous as if they are authorized to give investment advice whiles their job is just to help investors or clients fill forms, explain the various investment opportunities to the client or direct them to the licensed /authorized advisor.  
On several occasions, a Relationship manager of a reputable Brokerage house tried to advise me on my investments with the aim of convincing me to invest in the firm’s investment product which was a mutual fund whiles I insisted on talking to a broker. She thought I was just an ordinary investor who knows little or nothing about what I’m doing. She told me the stock market is not a place I should invest in. I asked why? And all she was able to say is that she doesn’t invest there so she won’t advise anyone to.  This was so surprising to me because I make so much money from the stock market. Moreover, she and her colleagues don’t have any authority to confuse investors in the name of investment advisory. It’s pathetic that investors are misled by this kind of ignorant people who act as experts. This must stop now.
I experienced the same thing in another brokerage firm when a receptionist tried to mislead me just because there was no broker around at that time. I ended up lecturing her about the current affairs on the market and the last thing she asked was my business card.

The Securities and Exchange Commission did not license these firms as broker-dealers or investment advisors because of the bogus advices their receptionists and relationship managers give. Every stakeholder must note this and I would advise all investors to seek for good advice from authorized, qualified and recognized investment advisory firms or people. The fact that someone works in such firms doesn’t make the person qualified to give investment advices. Be cautious and insist on talking to the best before you make any investment decision. Meanwhile don’t forget to do your homework before you invest. Study very well what you are investing in and talk to the experts not ‘ignorant’ receptionist.

History of Initial Public Offers (IPO) in the Ghanaian Capital Market.

Initial Public Offering which is popularly known as IPO comes about when companies issue new shares to the public to purchase as a source of raising capital. Ghana has a wonderful history of IPOs and since the inception of the Ghana Stock Exchange (GSE), there have been so many IPOs with an impressive performance in the market. Meanwhile others were just so bad and despite their impressive subscriptions, they traded badly on exchange.
On 12th November, 1990, Accra Brewery Limited (ABL) made a provisional listing on the Ghana Stock Exchange, making it one of the earliest companies to be listed on the Ghana Stock Exchange. This company and others existed before the inceptions of the GSE Public Limited Liability Companies hence were initially given provisional listing status before the formal listing. ABL made its formal listing on 20th December, 1991 (Source; GSE Research Dept.).
One IPO listing was by SPPC and this was from December to February 1992. Eight (8) million shares were offered but only 4.2 million shares were sold to raise an amount of 630 million old cedis (GHC 63,000). Mechanical LLoyd Company Ltd (MLC) also offered 11 million shares as IPO at 50 old cedis (0.05 pesewas) per share from December 1993 to February 1994 and only 9.36 million shares were sold which raised an amount of 468.16 million old cedis (GHC46,816). Looking at these historical trends, it is obvious that early IPOs were cheap but subscriptions were not impressive. In January 1995, HFC Bank stocks were oversubscribed when they made a placement.  Shares offered were 11.35 million at 100 old cedis (0.10 pesewas) and 13.10 million shares were sold to raise about 1,315.45 million old cedis (GHC 131,545). Most of the time, shares of this nature were patronized by foreigners because the investment community of Ghana was small by then. Aside the HFC placement, SSB (now known as SG-SSB) IPO in 1995 was also oversubscribed. Many companies like ALW, UTC, PZ, EIC, FML made primary issues which were not necessarily IPOs. In 2006, Ghana Commercial Bank (GCB) issued and IPO of 49.50 million shares but 68.44 million shares were subscribed. This oversubscription set the pace for most IPOs and the investment community of Ghana especially the youth, took advantage of them. Initial Public Offers of Camelot (CMLT), Produce Buying Company (PBC), Sam Wood Ltd (SWL), Cocoa Producing Company (CPC) followed and in 2004 alone, four (4) Companies (CLYD, BOPP, CAL & SPL) listed IPOs on the GSE. But how well do the trade on the Exchange?
About two year ago, Ecobank Transnational Incorporated (ETI) offered an IPO that was largely subscribed meanwhile these shares are facing liquidity problems as at now in the market. Share price of ETI has fallen below its IPO price and shareholders are not happy at all.  UT Bank entered the market with an IPO which was also oversubscribed but the question still remains, do IPOs perform well in the market. Shares of UT bank had so many problems when it started trading in the market but is currently bouncing back.
The most recent IPO issued in the market is the shares of Tullow Oil, just weeks ago and these were undersubscribed. Does it mean that the investment community is no longer having confidence in IPOs or it was due to the costly price of this particular offer? As an investor, you must find out because this can inform your investment decision.