Performance of stocks on the Ghana Stock Exchange

performance of stocks

Investing in stocks is proven to be one of the most lucrative means of building wealth. Stocks may be either listed or unlisted. Unlisted stocks (also known as over-the-counter stocks) are stocks that are not traded on a stock exchange but directly between two parties in a non-standardised form. Listed stocks, on the other hand, are stocks traded on a regulated market or exchange such as the Ghana Stock Exchange. There are currently about 40 listed stocks on the Ghana Stock Exchange. These are made up of various industrial sectors such as banking, insurance, manufacturing, mining, and petroleum. Usually, the performance of stocks on the Ghana Stock Exchange is captured by the ‘GSE all-share index’. The GSE all-share index, which can further be represented in a percentage format  (GSE return), reflects the overall performance of all listed stocks on the exchange. Refer to this link for all historical GSE returns (from inception to date).

Besides the GSE all-share index, the performance of stocks can also be measured for each individual stock. The most common means of doing this is by computing the return on the stock based on its share price appreciation (or depreciation) over a period. For instance, if a stock starts trading at the beginning of the year at GH¢2 and closes at the end of the same year at GH¢3, the said stock would be making an annual return of 50%. That is [(3-2)/2] ×100.

In the table below, you will find the historical returns of the various stocks listed on the Ghana Stock Exchange. These figures, covering the past six years, are calculated based on their opening and closing prices for each of the years under study. The average returns for the latest five-year period (2012-2016) are also computed.

See also: Performance comparison of mutual funds in Ghana

Performance of stocks: Historical returns of stocks listed on GSE
COMPANY TRADING SYMBOL RETURN, %
2011 2012 2013 2014 2015 2016 Latest 5-year average
1 AngloGold Ashanti Depository shares AADS -16.7 4 0 1.9 -1.9 0 0.8
2 Access Bank Ghana ACCESS N/A N/A N/A N/A N/A N/A N/A
3 African Champion Industries Limited ACI 0 -12.5 -14.3 -66.7 0 -50 -28.7
4 Agricultural Development Bank ADB N/A N/A N/A N/A N/A N/A N/A
5 AngloGold Ashanti Limited AGA 0 8.8 0 0 0 0 1.76
6 Aluworks Limited ALW 8.3 -61.5 0 -60 600 0 95.7
7 Ayrton Drugs Manufacturing Co. Ltd. AYRTN 6.3 5.9 0 5.9 0 -25 -2.6
8 Benso Oil Palm Plantation Limited BOPP 46.7 27.3 129.3 27.7 -38.8 -17.1 25.7
9 CAL Bank Limited CAL -9.4 35.7 162.2 4.1 2 -25.7 34.9
10 Clydestone (Ghana) Limited CLYD -42.9 0 0 -25 0 0 -5
11 Camelot Ghana Limited CMLT -25 16.7 14.3 -25 0 0 1.2
12 Cocoa Processing Company Limited CPC 0 0 0 0 0 0 0
13 Ecobank Ghana Limited EGH (Formally EBG) 6.3 -6.3 87 35.5 -7.6 -8.6 20
14 Enterprise Group Limited EGL -24 26.3 291.7 -6.9 37.1 0 69.6
15 Ecobank Transnational Incorporated ETI -21.4 20 58.3 47.4 -3.6 -63 11.8
16 Fan Milk Limited FML -3.3 50.4 86.5 -20.7 40 51.7 41.6
17 GCB Bank Limited GCB -31.5 13.5 131 13.4 -34.9 -6.1 23.4
18 Guinness Ghana Breweries Limited GGBL -1.9 71.2 136.6 -48.4 -37.8 -18.1 20.7
19 NewGold Issuer Limited GLD N/A N/A -18.8 37 8.9 -0.5 N/A
20 Ghana Oil Company Limited GOIL 10.3 93.8 43.5 19.1 33.3 -21.4 33.7
21 Golden Star Resources Limited GSR -47.1 0 0 -14.9 -15 -2 -6.4
22 Golden Web Limited GWEB -20 0 0 -25 -66.7 0 -18.3
23 HFC Bank (Ghana) Limited HFC 2.3 0 113.3 68.4 -43.8 -15.6 24.5
24 Mega African Capital Limited MAC N/A N/A N/A N/A 33.3 0 N/A
25 Mechanical Lloyd Company Limited MLC 10 36.4 153.3 -26.3 -32.1 -21.1 22.0
26 Produce Buying Company Limited PBC 92.3 -28 -5.6 -29.4 -16.7 -40 -23.9
27 Pioneer Kitchenware Limited PKL -14.3 0 0 0 -16.7 0 -3.3
28 PZ Cussons Ghana Limited PZC N/A -25 338.9 -62 13.3 -35.3 46.0
29 Standard Chartered Bank (GH) Ltd. SCB 0.7 -74.7 29.9 36.2 -19.9 -25.2 -10.7
30 Standard Chartered Bank (GH) Ltd. (Prefrence shares) SCB PREF 0 0 0 5.8 29.1 5.6 8.1
31 Societe Generale Ghana Limited SOGEGH (Formally SG-SSB) -28.1 2.1 56.3 33.3 -20 -22.5 9.8
32 SIC Insurance Company Limited SIC -7 -15 14.7 -5.1 -62.2 -14.3 -16.4
33 Starwin Products Limited SPL -40 66.7 -20 -50 100 -25 14.3
34 Sam Woode Limited SWL 0 0 50 33.3 0 0 16.7
35 Trust Bank (Gambia) Limited TBL -69.9 0 -12.5 -31.4 54.2 -29.7 -3.9
36 Tullow Oil Plc TLW N/A 22.7 -8.1 0 -6 -18.3 -1.9
37 Total Petroleum Ghana Limited TOTAL 98.3 18.5 N/A 20.6 -16.4 -61.2 N/A
38 Transol Solutions Ghana Limited TRANSOL -28.6 -20 -25 0 0 0 -9
39 Unilever Ghana Limited UNIL 16.7 28.3 114.9 -41.6 -20.6 0.1 16.2
40 UT Bank Ghana Limited UTB 14.3 18.8 18.4 -44.4 -60 -70 -27.4

*N/A: Not available, mainly because the company was not listed on the stock market by then

Performance of stocks: Brief observations

According to the data above, the performance of stocks for most listed companies has not been encouraging over the six-year period. For instance, African Champion Industries Limited (ACI), Clydestone Ghana Limited (CLYD), Golden Star Resources Limited (GSR), Golden Web Limited (GWEB), and Transol Solutions Ghana Limited (TRANSOL) never recorded a single positive return throughout the period. Moreover, their latest 5-year average returns were -28.7%, -5%, -6.4%, -18.3% and –9% respectively.

Another key observation from the data has to do with stock volatility. Even though some stocks depict impressive average returns for the latest five-year period, the trend of their annual returns appears to be erratic. A typical example is Aluworks Limited. According to the data, Aluworks’ 5-year average return (95.7%) was contributed by the sole remarkable return (600%) it recorded in 2015. PZ Cussons similarly posted a 5-year average return of 46% which was mainly due to the 338.9% it recorded in 2013.

On the other hand, some listed companies have been consistent in good shape over the six-year period. A few of these stocks, according to the data, include Benso Oil Palm Plantation Limited (BOPP), Ghana Oil Company Limited (GOIL) and Fan Milk Limited (FML). BOPP recorded negative returns for two years (2015 & 2016) and positive returns for the rest of the four years. It further posted a 5-year average return of 25.7%. Similarly, Fan Milk Ltd recorded negative returns in 2011 and 2014, positive returns for the rest of the four years and a splendid 5-year average return of 41.6%. GOIL recorded only one negative return in 2016, with a 5-year average return of 33.7%.

In terms of industrial sectors, the banking and finance stocks seem to perform better than stocks of other sectors. A few studies show that the well-being of an organisation’s industrial sector may impact the performance of its stock. It is due to this reason why investors are advised to invest in industries they are familiar with. Thus, it may be beneficial to look further and compare the performance of stocks according to their industrial sectors. Refer to this link for the historical returns of stocks categorised by their various industrial sectors.

It is essential to note that stocks’ returns based on their price appreciation alone may not constitute their total performance. This is because other factors such as dividend payments and any bonus shares issued by the companies can also be considered. In spite of this, stocks’ returns play key role in terms of their performance rating. At least, we know that the rate of dividend payments by most companies is fairly low as compared to returns on stocks.

Furthermore, one must be cautious when utilising historical results for any financial decision. Although many financial analysts depend much on historical performance of stocks, a few veteran investors caution on such practices. For instance, Warren Buffet once argued that:

If past history was all there was to the game, the richest people would be librarians.”

In a nutshell, even though historical results may not guarantee the future performance of stocks, they may still aid investors to have a clear picture of what is happening on the stock market.

4 financial stocks you may consider buying

4 financial stocks

Financial stocks generally perform well on the Ghana Stock Exchange in comparison to stocks of other sectors. Although I invest most of my stock portfolio in equity funds managed exclusively by professionals, I also enjoy picking some stocks on my own. Yeah, sometimes it’s fun to do some things on our own even though we may not be that ‘professional’. However, since stocks require some needful attention, I prefer to select very few ones which I can keep track. When it comes to stocks trading, a lot of measures need to be considered. For simplicity, I mostly look at three basic factors:

1. The price & worth of the stock.

2. How active the stock trades on the market.

3. How consistently dividends are paid by the listed company.

See also: A simple stock trading strategy for the risk-averse investor

Price & worth of stock

A huge portion of returns accrued from stocks come from capital gains. That is, the profit made by selling stocks at prices higher than what they were bought for. In other words, in an ideal condition, stocks should be sold at prices higher than what they were bought for in order to make some gains. The performance of the Ghana Stock Exchange (GSE) has been on a downward trend this year, with a year-to-date composite index of -12.11% as of 10th June, 2016. This compounds the stock market’s loss of -11.77% for the year 2015. In effect, prices of many listed stocks have drastically dropped from their previously high prices. While it may be logical to buy stocks during this period, it is also cautious to look beyond their low prices alone. Importantly, It is vital to also consider how valuable the stock is, even though the price may be low. A simple metric used to determine the value of a company’s stock is the ‘price per earning’ (P/E) ratio. P/E ratio measures a company’s current stock price relative to the company’s earnings. In essence, it can be used to decide whether the stock of a company is worth buying or not. A low P/E ratio may indicate that the company is undervalued or doing quite well relative to historical trends. In contrast, high P/E ratios normally imply overpriced stocks. It is always advisable to only compare P/E ratios of companies in the same industrial sector. This is because different ways are employed by different sector organisations to earn their money.

Stock activeness on the market

There are a few stocks on the Ghana Stock Exchange that hardly exchange hands. Most of such stocks are held for long term by institutional investors such as the Social Security and National Insurance Trust (SSNIT). Consequently, it becomes difficult to buy or sell them on the bourse. There has been an occasion when my money was locked up by a stock broker for much longer than expected due to the lack of trading activity for the stock I opted to buy. As a result, the money lost value pending the long wait for the stock purchase. I guess you already know the behaviour of our Ghanaian currency, right? It is for this reason why I now pay attention to stocks that actively trade on the market.

Consistency in dividend pay-outs

Many of us are aware that stocks are long-term investment products. But, how patiently can we wait to reap the final long-waited returns? I agree that companies must reinvest their profits in order to grow and make more returns. However, I also believe that as investors or shareholders, there should be some form of regular motivation to keep us investing in the companies. Of course, we need to stay ‘alive’ while we keep waiting for that faraway future growth. Unfortunately, not all listed companies consistently pay dividends to their shareholders. Thus, paying attention to historical trends of dividend pay-outs would be worth it when deciding on stocks to buy.

 

The 4 selected stocks

Now, imagine buying a product which sells at 30% less than its original price a few months ago. If this product is still of good quality, won’t it be worth buying more and selling them later when the price restores to the original high price or even higher? This is the primary motive behind the four picked financial stocks.

1. UT Bank Ltd. (UTB)

The current price of UTB stock is GHS 0.07 as of 10th June, 2016. About a year ago (12th June, 2015), the same stock sold for GHS 0.19, reflecting a huge loss of 61% within the same period. The current P/E ratio of UTB is 3.5 which appears to be relatively low. As an additional background, the initial public offer (IPO) of UTB was sold in 2009 at GHS 0.3/share. The stock struggled for a while but managed to reach as high as GHS 0.52 on 10th June, 2013. Concerning its activeness on the bourse, UTB is one of a few stocks that regularly trade in high volumes. The bank has however been facing some challenges in the past years making it difficult to pay dividends to its shareholders. The last time dividend was paid was 2012, with a dividend yield of 5.26%.

 

UT bank performance chart- financial stocks
One-year performance chart of UT Bank

 

2. Ghana Commercial Bank Ltd. (GCB)

The current price of GCB stock is GHS 3.04 as of 10th June, 2016. The same stock sold for GHS 4.9 a year ago (10th June, 2015), reflecting a loss of 38% within that period. Continue reading “4 financial stocks you may consider buying”