21 Feb

Cash-Rich Pension Funds in Ghana Drive World-Beating Stock Gains

A flood of money from private pension funds has driven a 33 percent surge in Ghana’s benchmark stock index this year, giving the West African country the world’s best-performing equities.

The government in December transferred 3.1 billion cedis ($690 million) to the funds, money the state had held since 2012 while the industry put structures in place for new entrants.

Seven months earlier, Ghana doubled the proportion of assets that pension funds can invest in stocks to 20 percent.

“We are seeing more participation from local institutional investors, especially the pension funds,” said Sena Agbo, head of investment banking at SAS Finance Group, which runs the country’s second-best performing mutual fund. “The temporary pensions account now transferred to them is enabling them to increase their take of stocks.”

The value of stocks traded by local investors increased almost five-fold from a year earlier last month, according to the Accra-based Central Securities Depository Ltd.

As of Tuesday, the 36-member Ghana Stock Exchange Composite Index had risen more than the 95 other benchmarks tracked by Bloomberg in dollar terms since Jan. 1, boosted by a World Bank forecast that the economy will expand by 8.3 percent in 2018, the fastest pace on the continent.

“The economy is growing and a lot of incentives like tax cuts and utility price decreases are out there to make businesses competitive,” Sidney Koranteng, a stock trader at Databank Group in Accra, said by phone. “It shows we’re in a period of a boom. The market is not hot yet.”

Source: https://www.bloomberg.com/news/articles/2018-02-21/cash-rich-pension-funds-in-ghana-drive-world-beating-stock-gains

21 Nov

Mugabe’s Woes Wipe Out $5 Billion From Zimbabwe’s Skewed Stocks

Investors dumped Zimbabwean stocks every day since the military seized power on optimism that 93-year-old President Robert Mugabe will be forced to step down.

The stocks, which are denominated in U.S. dollars and were used to hedge against rising inflation, fell 10 percent on Monday to an eight-week low of 387.38, bringing the Zimbabwe Stock Exchange Industrial Index’s retreat since the army’s takeover on the morning of Nov. 15 to 27 percent.

The bourse’s market capitalization has plunged $4.8 billion in that period to $11.1 billion, according to data compiled by Bloomberg and the Zimbabwe Stock Exchange.

Zimbabwe’s stocks soared this year after the government printed a new form of money — called bond notes — to deal with a cash shortage, stoking concerns over price growth in a nation that saw inflation jump into the billions of percent about a decade ago. While the southern African nation has mostly used the dollar since scrapping its own worthless currency in 2009, greenbacks have become scarce as Zimbabwe’s balance of payments position has worsened.

Read more: Mugabe’s Woes Wipe Out $5 Billion From Zimbabwe’s Skewed Stocks