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SEC works towards development of the stock market

In the meantime, SEC has been working towards getting the Securities Exchange Bill passed by parliament and subsequent assenting by the President.
The SEC has succeeded in getting parliament passed the Bill in July this year, but left with the Presidential assent.

However, the Deputy Director General, Legal at SEC, Alexander Williams has noted that, he is highly confident of some multinationals listing on the Exchange next year.
“We are looking forward to that in 2017. Infact there are some in the pipeline whose IPOs are being processed and their names will come up in due time,” he stated. Mr. Williams added, “But I believe that in 2017, we are going to see a lot more people in terms of multinationals coming onto the capital market.”
He said this at the launch of the IPO for TTL Capital’s ‘TTL Income Haven fund’ last week.

The Director General of SEC, Adu Anane Antwi in July this year intensified lobbying to get multinationals to list on the GSE. His renewed calls followed a consideration by Nigeria’s legislature to pass a law to get multinationals list on the Nigerian Stock Exchange (NSE).

Dr. Adu Anane Antwi argued that the move will help reduce the foreign exchange losses facing the country. “One of the challenges that we face with our currency is the amount of dividends that flows out of the country every year.

If we get some of these companies list part of their shares on the Ghana Stock Exchange, at least parts of the foreign exchange that they take every year in terms of dividends, will remain here and that should help us manage our foreign exchange value and the rate,” he stated.

Meanwhile SEC says the apparent ineffective investment decisions by some fund managers continue as one of the challenges facing the sector.

The Deputy Director General, Legal, Alexander Williams asserts that not only do investment companies face the challenge of meeting the investment obligations to their customers, but also the lack of confidence that it generates in the sector.

However indicates that his outfit has begun discussions with various fund managers which should ultimately reverse the rather worrying trend.

“Quite a number of people are investing in products that don’t bring the returns that they need to pay off their investors and that is worrisome to us. Because once you invest, you will need to get back the returns when you need it and that is what we are working on,” the Deputy SEC Boss remarked.

“I believe that we have had a number of meetings with the brokerage firms and they’ve realized where the defects are and are all working on it together with the regulator,” he added.

Managers of TTL Capital explained that the decision to launch its IPO for the Income Haven fund was backed by a shift towards the fixed investment market.

They further explained, the fund seeks to generate a high level of current income, security of principal and growth amidst liquidity.

“The fixed income market is currently lucrative since the equity investment is declining and entering the negatives so that is what prompted us to undertake this mutual fund in a fixed income light so that we can bring in investors,” Adjoa Owusu-Takyi Head of Asset Management and Business Development at TTL Capital noted.

The Securities Exchange Bill is set to enhance the development of the capital market.

The bill, is expected to facilitate the development of the market and also enhance the legal framework to regulate new sectors.

SEC believes that, “The bill will facilitate the development of the securities market, provide a legal framework to accommodate all forms of securities presently and also strengthen the operational independence of the commission to effectively and efficiently regulate the securities industry”.

It is expected that, the law would also create the opportunity for market operators to add to their bouquet of products.

The capital market has been waiting for the regulation which will enable them to trade in real estate-linked securities, usually called REITS.

While investment bankers and asset managers are not allowed to directly invest in financing real estate projects, the new Securities Bill, when it becomes law, will permit such funds to be channelled to assets that are linked to the real estate.

That way, the funds under management could be channelled into financing real estate property development, a win-win for the economy.

Mr Williams added; “the law will also strengthen the commission’s mandate to tighten regulations and increase investor education with the aim of ensuring investor protection.”

The Securities Industry Bill, which was presented to Parliament in 2015, has been passed and is awaiting the President’s assent.

The bill seeks to revise and consolidate existing laws relating to the securities industry.

The laws that regulated the securities sector had been in place for over 20 years and as such some provisions had become obsolete, given the dynamic nature of the industry.

The Securities Industry Act, 1993 (PNDCL, 333) and Securities Industry (Amendment) Act, 2000 (Act 590) which currently provided the legal framework and regulated the sector, did not meet international standards and had led to the country being suspended from participating in the activities of the International Organisation of Securities Commissions (IOSCO).

The new law would, therefore, ensure compliance with IOSCO objectives and principles and provide a comprehensive legal framework for the securities industry in the country.
Unfortunately, the sad news of the market is that, only three out of 36 listed firms on Ghana’s Stock Exchange have since January 2016 registered growth in their share prices, The Business Finder reports.

The market capitalisation of the 36 listed firms on the main market has also shrunk from GH¢57.1 million as at January 1, 2016, to GH¢53.1 million as at Friday September 16, 2016.
Marke watchers say the development is attributable to the economic difficulties of the country.

The unbridled borrowing by the government has also increased investor appetite for short-term securities, thereby depriving the Accra bourse of investor interest.
Fanmilk, GCB Bank and SIC are the only companies that had increased their share prices and subsequently boosted their market capitalization as at September 16, 2016.

Source: Adnan Adams Mohammed

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