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.
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|
|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.