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

GSE Composite Index starts the year positively

GSE Composite Index started the year on a positive note, recording a 9.11 point increase from 1,689.09 points to close at 1,698.20 points. The index started the year with a 0.54% return.
 
Sixteen equities recorded activity with 1,057,849 shares being traded at a value of GHS 2,470,257.49. UTB led the market with 40.48% of shares traded while FML on the other hand had 92.24 % of the total value realised.
 
CAL, EGH, FML, GCB, SCB and TOTAL recorded gains respectively. No losses were recorded today.

– CBL RESEARCH

What To Do Before Buying Any Stock

In all my investment coaching I tell my clients who want to venture into stocks trading or investment, to do one thing and that’s what you should do before buying any stock in 2017.

And that is; READ MORE ABOUT EVERY COMPANY YOU DESIRE TO OWN.

Knowing more about the companies you buy or sell always gives you some upper hand and courage.

So get to work. And this is how;

On the Ghana Stock Exchange for instance there are about 35 listed companies. In 2017, target to read the Annual Reports, related news and learn more about what each of these 35 companies do.
You can dedicate one week to study about one company and before you know it, you will be more abreast with what’s happening in the Market and then you can make informed decisions.
Most of the information you will need can be found here (www.annualreportsghana.com)
Fast readers can take two companies a week and read on.
Do not be scared of the figures and do not worry about interpreting the financial statements. The goal here is to know what these companies do to make profit, nature of their business, what industry they operate in, who is on their boards or management, who are the top 10 or top 20 shareholders, and any other relevant information you will get in their annual reports.

Doing this will not only get you informed but also build up some zeal or interest in you towards investing on the stock market.

You can apply this principle to other Investments you intend to hold, being it real estate, mutual funds, fixed income securities etc.

Simple task that always pays. Enjoy reading.

Financing Your Investments Using Borrowed Money: Margin Trading on GSE

image credit: claytrader.com
I am still deeply concerned about the speed of growth of the Ghana Stock Exchange. Market players are blaming it on the low level of activities on the market because investors are few and hence ‘Ghanaians do not invest enough’.  The question then is, do the few investors we have, get the necessarily tools, options and systems to facilitate the investment process? In cases where investors want to buy more stocks but short of funds, what happens next? Is that the end?
That brings me to the concept of Buying Stocks on Margin. When are we reaching a point where we can buy stocks and other securities on margin? Every time I interact with my colleagues in the market, I hear the response that, it’s in the pipeline. Truly, this pipeline is really long.

What Does Buying on Margin Mean?
Simply put, it is borrowing part of the total purchase amount of a position using loan from a broker. Margin trading allows you to buy more shares from a listed company with the financial help from your broker than you can normally buy. With Margin trading on Ghana Stock Exchange, the market doesn’t only increase in activities but also gives brokerage firms a lot of opportunities to grow bigger. 
Investor who trades on Margin vrs one who does not:
Margin is a double edge sword. As much as margin trading of stocks can bring some good things into the market, so is the risk and let’s see how bad it is.

Here is an example:  Imagine Investor A & B has Ghc 50,000 each worth of stock in their brokerage accounts and this allows them a margin debt of Ghc 50,000 to buy extra stocks (let’s say in a company priced at Ghc 1 per). If Investor A takes the margin available and buys more stocks at the said price, he gets Ghc 100,000 worth of stocks whiles Investor B only has Ghc 50,000 in his / her account. If the share price appreciates to Ghc 2 (100% increase), Investor A will now be worth Ghc 200,000 whiles Investor B will be worth Ghc 100,000. In this case, Investor A can then pay his debt of Ghc 50,000 to his brokers leaving him / her Ghc 150,000 which is Ghc 50,000 more than Investor B who never took the margin available.
On the other side of the coin, when share price in the said company falls to 0.50p, (50% lower), Investor A will get a Margin Call from his brokers requesting him top up his account with more money. In this case, the investor does not only lose 50% of his initial portfolio value but also has a debt of Ghc 50,000 to pay.
It’s always good to take advantage of the money available from your brokers but you need to be aware you stand a chance of wiping out all your equity, leaving you broke or bankrupt.
The beauty of margin trading in the Ghanaian market is that, you cannot wake up over night and see prices of stocks deep so low as a result of any news as it happens on the advanced stock exchanges. Thus if you do your homework well enough, you stand a chance of making a lot more than you equity will allow you. This obviously can create a lot more activity on the Ghana Stock Exchange.

GCB recorded its 13th gain from start of the 3rd quarter on GSE

The GSE-Composite index closed mid-week’s 1.99 points high, from 1,789.73 points to 1,791.72 points. The year-to-date currently stands at -10.19%.

The GSE financial stocks index closed at 1,686.52 points, up 2.87 points from 1,683.65 points.

A total volume of 0.15 million shares was traded for a sum of GHS0.03 million. The traded volume and value decline by 37.85% and 95.09% respectively. UTB and ETI were the dominant equities, accounting for 49.33% and 34.05% of traded volume and traded value respectively.

ALW bounced back from a GHS0.02 loss on Tuesday to close trading at GHS0.14. GCB recorded its 13th gain from start of the thrid quarter this year to date, to close trading at GHS3.34. PBC and UTB saw their share prices decline.

GSE Stocks: My 6 Technical Picks regardless of Intrinsic Value

The Ghana Stock Exchange has been performing really bad so far this year. The GSE Composite Index is 9.20% down as at today and the GSE Financial Stock Index is even worse,  recording –11. 38% loss. It looks like there is no hope for there rest of the year although the economy is predicted to get better.
Looking through the various listed stocks,  I see a number of companies that are trading significantly lower than they used to trade in the past years when the market was performing averagely well.
Using my technical analyst’s eye, I won’t hesitate to buy shares in these companies knowing that when the stock market gets back booming,  they will go higher than their current market prices.
1.  HFC BANK (HFC). – HFC is currently trading at 0. 85p and has been trading lower than it has been in the past.  There could be other factors but looking at the General performance of the Financial Stocks this year,  I am hoping it will get back to the tens (that’s trading around Ghc 1.2 – its current year high). 
2.  MECHANICAL LLOYD (MLC) – MLC is currently trading at 0.18p which happens to be its year low and  it recorded a year high of 0. 21p.  I have seen it trade around this range (20s range) for sometime and holding other factors constant,  It’s making a nosedive due to the current pressure in the market.
3.  ALUWORKS (ALW) – ALW is currently trading at 0.09p and has probably experienced more pressure or shock from the systematic risk in the market than most companies. In the past years it has been trading in the double digits (around 0. 14p).  At a point in this year,  it went as low as 0.07p.
 
4.  ECOBANK TRANSNATIONAL INC (ETI) – ETI is currently 0.17p and heavily responsible for the market’s down turn.  Trading of it is still active on the bourse and I won’t hesitate to buy if my objective is long term focused. It recorded a year high of 0.27p.
5. STANDARD CHARTERED BANK (SCB) – SCB is currently trading at Ghc 15.10 and in my opinion it’s quite lower than it’s performance in the past years on the exchange.  Exactly a year ago,  it was trading at Ghc 20.29. There could be other factors causing it’s current performance aside the risk in the economy but it’s a buy for me.
6.  TOTAL PETROLEUM  (TOTAL )– TOTAL is currently trading at its year low, which is Ghc 4.3.  Last year,  it traded as high as Ghc 6.10 despite the global pressure on oil. As oil prices begin to see a improvement, we shall see how that will reflect in the price of TOTAL. 
So now you know my take based on historical performance of prices. As I mentioned,  there are alot more factors responsible for the price changes in securities on the GSE and could be why some are trading so low but my analysis did not regard any of those factors. One major systematic risk affecting the market is the attractively high returns from Government securities (e.g. Treasury bills) which serves as an alternative for investors. 

How the stock market really works

Once upon a time in a village, a man announced to the villagers that he would buy monkeys for Rs 10.
The villagers, seeing that there were many monkeys around, went out to the forest and started catching them..
The man bought thousands at Rs 10 and as supply started to diminish, the villagers stopped their effort.
He further announced that he would now buy at Rs20.
This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms.
The offer rate increased to Rs 25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at Rs 50!
However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs 35 and when the man returns from the city, you can sell it to him for Rs 50.”
The villagers squeezed up with all their savings and bought all the monkeys.
Then they never saw the man nor his assistant, only monkeys everywhere!
Welcome to the ‘Stock Market’!!!!!!!!