The performance of the GSE vs T-Bills- Article

The performance of an efficient stock exchange depicts the performance of an economy. Whilst the performance of the stock exchanges in Asia, Europe and the USA is of great concern to their respective authorities and economic managers, the same cannot be said about Ghana.

The Ghana Stock Exchange(GSE) has however enjoyed some successes over the period, and the last 20 years has been quiet eventful.

This write-up attempts to compare the performance of the stock market and money market instruments, specifically the 91-day Treasury Bill in Ghana.

Between 2006-2016

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Returns on Treasury Bills have averaged 17.90% whilst the Ghana Stock Exchange have returned 14.37%. In real terms, investors on both sides lower figures, returning 4.50% and 0.94%, respectively.The year 2009 was the most challenging for shareholders, as the exchange dropped by -46.58%. The year 2013 was the highlight of the decade, recording 78.81% against 18.80%for T-Bills. The market recorded –46.58% in 2009, -3.10% in 2011, –11.77% in 2015 and –15.33% in 2016. It is also important to note that stock exchanges are expected to be high yielding in the long term.

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Macro-economic challenges over the period could have impacted on the performance of the GSE as the period was characterized by high depreciation, power challenges, and high interest rates amongst others.

Between 1996- 2005

The period saw the GSE return 40.04% on average against 30.39% for T-bills. In real terms, the exchange returned 17.73% against 8.08% for T-bills.

Within that period, the GSE returned negative in 1999 and 2005 recording -15.22% and -29.72%, respectively;the only years the market recorded negative postings.

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Highlights within the period (1996 to 2005) include 41.85% in 1997, 69.69% in 1998, 45.96% in 2002, 154.67% in 2003 and 91.33% in 2004. The market was bullish over the aforementioned periods. Even though conditions were not perfect within this period macro-economic stability was crucial for the stock market’s performance.

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Ghana Stock Exchange vs Treasury Bills

Over the twenty years under review, 91 day Treasury bill returns averaged 23.87% whiles the stock market returned 26.59%.

Over the same period inflation averaged 17.64%. In real terms, treasury bills returned 6.23% whiles the stock market returned 8.95%.

The signs ahead

  • The IMF’s3 year austerity plan which ends in 2017 is expected to give the Cedi a boostagainst major trading currencies over the period. This is expected to give listed companies a lift due to a stable exchange rate.
  • The medium and long term debt management strategy adopted by government is expected to result in a further decline inTreasury bill rates. The lowering of the policy rate from 26% to 25.50% in November 2016 is also a factor that could enhance the performance of the GSE due to lower credits costto listed companies, should the trend continue.
  • Theproposed downward review of corporate taxes from 25% to 20% when implemented is expected to boost listed companies’ bottom lines.
  • Signs that business activity is picking up in Asia could influence global economic recovery. The Baltic Dry Index gained over 100% in

A Tip

Most stocks on the GSE are currently trading below their intrinsic values, with an expected improved economy, we expect a general bounce back of market activities resulting in a better return compared to previous years.


From the above analysis, it can be concluded that the stock market is high yielding than shorter term instruments when investing funds in the long term.

Kofi Busia Kyei(right) Financial Analyst Wilfred Agyei (left) Research Analyst

By: Kofi Busia Kyei(right) Financial [email protected] Agyei (left) Research [email protected]/