The Ghana Stock Exchange (GSE) has formally joined the African Exchange Linkage Project (AELP), alongside over 30 other African stock exchanges, opening up wider opportunities for domestic investments.
The initiative seeks to deepen liquidity, provide seamless investment opportunities and improve trading volumes across stock exchanges on the continent by providing access to investors in over 2,000 companies across sectors – ranging from consumer to financial services, technology and infrastructure – while opening up a new US$2trillion market capitalisation to investors. Besides, the platform will widen the market size for stockbrokers – allowing them to construct products and provide investment advisory services, thus enhancing the value they offer investors.
GSE Managing Director, Abena Amoah – speaking during a meeting to formally announce the decision, stated that the AELP initiative will improve capital access for companies in the country and across Africa, while closer collaboration among regulators will ensure a better experience for companies raising capital.
“The developmental needs of Africa’s private sector require significant capital, and with this project any company in Ghana needing to raise capital now has access to investors all over Africa. This platform can help companies and projects raise capital more effectively. From a regulatory standpoint, closer collaboration among regulators will ensure the best experience for companies raising capital and investors providing savings for investments,” Ms. Amoah said.
Brokers across the region have been onboarded to the project and aligned with expectations as the platform works toward seamless project execution. The success of the first phase which connects seven markets across the continent proves this alignment. These markets include those of Mauritius, Johannesburg, Nairobi, Nigeria, Morocco, Egypt and Casablanca.
Phase-two of the AELP project plans to expand the initiative to another eight African markets with Ghana and Botswana already part of the initiative. The project will increase market liquidity, enhance investment opportunities and open access to more markets across Africa, broadening the investor pool for businesses to raise capital.
Speaking on the project, Thapelo Tsheole – Chief Executive Officer of Botswana Stock Exchange and president of the African Securities Exchanges Association (ASEA), noted that investors looking to buy shares in Ghana, for example, will bring money into the market; ultimately improving liquidity while attracting foreign investment. The project is expected to help improve the functionality of African stock exchanges, reduce costs and provide more efficient trading and buying share opportunities.
Supported by the African Development Bank, the second phase will see another eight markets join the coalition, including Botswana and Ghana. After the full implementation, it will boast close to 15 connected markets; and trading and buying shares between African markets is likely to increase.
Already, the African Securities Exchanges Association (ASEA) – of which the GSE is a member – has a partnership agreement with the Pan-African Payments and Settlement System (PAPSS), enabling investors to purchase securities in any African market and execute transactions in local currencies; with central banks handling currency conversion at the back office. Technology also plays a critical role, and attention is on educating the population and investors about the new opportunities available.
The market is of the view that the AELP project will help investors and brokers, offering more opportunities for businesses to gain capital.
The move rounds up a couple of proactive months for the GSE, as it attained full membership status with the World Federation of Exchanges (WFE) in October 2022.
WFE is the foremost organisation representing exchanges and clearing houses (CCPs) worldwide, setting the benchmark for regulatory standards in securities and derivatives markets. It encompasses over 250 market infrastructures in both established and emerging markets, making it highly respected. The collective market capitalisation of the 59,400 listed companies under the WFE umbrella exceeded US$122.94trillion by the end of 2021.
Earlier, in July 2022, the Accra bourse partnered with the United Nations Sustainable Stock Exchanges (SSE) initiative – a network of 116 stock exchanges and 13 derivatives exchanges around the world – to promote sustainable development and ensure responsible business practices in the stock market.
The AELP project, analysts say, is a game-changer for the African stock exchange and presents new opportunities for investors and businesses alike. By increasing liquidity, interconnection and accessibility, the project can provide a much-needed boost for the continent’s capital markets and support economic progress.
Source: thebftonline.com