GSE to introduce new debt market for listed companies
The Ghana Stock Exchange (GSE) is set to introduce a new debt market – the Commercial Paper Market – to allow listed companies to raise short-term funds to meet their financing needs.
This move by the GSE is aimed at improving liquidity on the stock market, which has been a major problem for years. The exchange has recorded negative returns on equities for the past four to five years, and the introduction of the new debt market coupled with the creation of the Private Capital Market, are expected to provide investors with more investment options and companies with an alternative way of raising funds.
Speaking during NorvanReports’ Twitter Space Conversation on Sunday, February 26, 2023, themed “Ghana Stock Exchange – Whence Cometh the Revival”, David Tetteh, a Consultant at the GSE, noted Ghanaian investors and businesses understand debt and loans better than equity, and this is evident in the large volumes of trading on the stock market. As a result, the GSE is developing market products that are more like loans to cater to the needs of Ghanaian investors and businesses.
The new debt market is expected to improve the overall performance of the market, with equities recording positive performance.
The move to introduce the new debt market is in line with global trends, as debt markets have become increasingly popular in recent years. Companies are now looking for alternative ways of raising funds, and debt markets have emerged as a viable option.
The Commercial Paper Market and Private Capital Market are akin to loans taken from banks, and will allow companies to raise short-term funds to meet their financing needs.
In addition to the introduction of the new debt market, there are several other measures the GSE can take to revive the market. These include the listing of multinational companies, better management of the economy by the government, campaigns and education to encourage companies to list and investors to invest in the stock market, and leveraging financial technology to aid trading on the stock market.
The listing of multinational companies will attract more investors to the market and improve the liquidity of the exchange. Better economic management by the government will create a more conducive environment for investment, and campaigns and education to encourage companies to list and investors to invest in the stock market will increase awareness and interest in the market. The use of financial technology will make trading on the stock market more efficient and convenient.
The introduction of the Commercial Paper Market and Private Capital Market by the GSE is a step in the right direction, as it will provide investors with more investment options and companies with an alternative way of raising funds.
