Stock market analysts are predicting tough times for the managers of the Ghana Stock Exchange at least for the next couple of weeks.
The bearish performance of the local bourse for some time now has raised concerns on the impact on existing companies.
But it appears the heavier task will be how the managers will cope within this shaky moment of the market.
The managers of the local bourse have a task to help five companies to raise at least 4.7 billion cedis by the end of this year.
This comprises of MTN’s 3.48 billion cedis plus Right to Issue of four other banks totaling 1.19 billion cedis.
This means that the banks are falling on existing investors to bring in new capital.
While MTN is expected to complete the process as part of regulatory requirement for its 4G license, the banks are seeking to meet the new minimum capital requirement of 400 million cedis with the move.
An Economic Analyst with Databank, Courage Boti explains the scope of work ahead of the managers of the bourse currently.
“Generally raising money at this time where a lot seems to be going on doesn’t give much optimal subscriptions to the issuance that is ongoing. MTN we all know is a big player so the floating players that will be available for the companies seeking the Rights to Issue are not coming over, they now have an option in MTN to take up,” he said.
MTN’s IPO has been considered as the largest so far in recent times after that of ADB Bank which targeted 383 million cedis in 2016.
Already, some existing investors are giving up their shares in older stocks to purchase MTN shares.
One reason is that they believe the stocks have yielded appreciable gains hence they prefer to invest in new stocks.
The development has also led to a drop in trading activities from about 20 to 11 percent between January and June this year.
Like other analysts, Courage Boti tells Citi Business News the expectation of interests to be shown by pension fund managers and other institutional investors should normalize the situation on the market.
“The pension fund managers and insurance companies could mobilize some liquidity and get into the market and take some offers. I see them as the suppliers of liquidity when push comes to shove. Indeed they have the money as retail investors won’t give you much,” he asserted.
In all these, a successful transaction for MTN will mean Ghana could be able to access foreign exchange to address recent depreciation of the local currency.
Also, the rise in the banks’ capital will mean their ability to undertake huge ticket transactions and boost the local economy.