How To Invest in the Ghana Stock Exchange [in 6 simplified steps]

1. Pick a Dealer

Dealers are the licenced intermediaries who are authorised to trade financial assets on the Ghana Stock Exchange.

2. Open a Trading Account with the Dealer

The only requirement is to be of legal age and have a residence in Ghana. The Dealer will provide you with access to their investment platforms, allowing you to send purchase and sale orders to the Ghana Stock Exchange's central system.

3. Choose the Asset in which to invest

The investor has to decide whether to invest in shares, sovereign bonds or corporate bonds.

4. After making a decision, send a Buy order via the Dealer

Submitting a purchase order for a financial asset. It is possible to set a limit price or a market price of the selected asset.

5. The transaction is completed if the buy and sell prices match

When the bidding price of an asset coincides with the asking price, the trade is executed. The Dealer makes the transaction payment at the Stock Exchange in your name, and they deliver the transaction amount to the buyer/seller Dealer. You become the legal owner of the asset.

6. The Dealer issues the transaction notification and charges their fees

There is no fixed fee, which means that when choosing a Dealer to invest in the Ghana Stock Exchange, it is crucial to choose one that can better adapt to the investor's situation.

How does the Ghana Stock Exchange work?

What is the Stock Exchange

Based in Accra, the Ghana Stock Exchange was founded in 1990 and is the country's leading Stock Exchange. The idea of establishing a Stock Exchange in Ghana lay on the drawing board for almost two decades before its implementation. In February 1989, the establishment project of a stock exchange was moved a higher gear when the Government appointed a ten member Committee. As a result of the committee's work, the Stock Exchange was established in July 1989 as a private company limited by guarantee under the Companies Code of 1963. Trading commenced in 1990.

In short, the stock exchange is the institution that facilitates the negotiation of financial instruments in Ghana. Supply of financial instruments such as stocks, bonds, currencies, and the demand for these instruments (i.e. investors) interact here. It holds daily "Trading Sessions", for which it provides the physical, technological, human and operational means that allow efficient communication between Dealer (Internationally known as 'Brokers'), Issuers and Investors.

What is a Securities Issuer?

Issuers of securities are companies that seek to grow through raising capital at the Ghana Stock Exchange. These companies raise money by issuing debt (bonds) or capital (shares). Issuers of securities may be government-controlled entities or private companies, but no matter who owns the company, it is the issuer who backs the investment. By Feb 2021, there were 38 listed companies at the Exchange: AngloGold Ashanti Depository Shares; Access Bank Ghana; Agricultural Development Bank; AngloGold Ashanti Limited; Aluworks LTD; Benso Oil Palm Plantation Ltd; CalBank PLC; Clydestone (Ghana) Limited; Camelot Ghana Ltd; Cocoa Processing Company; Dannex Ayrton Starwin Plc.; Digicut Advertising and Production Limited; Ecobank Ghana Ltd; Enterprise Group   Limited; Ecobank Transnational Incorporation; Fan Milk Limited; Ghana Commercial Bank Limited; Guinness Ghana Breweries Ltd.; NewGold Issuer Limited; Ghana Oil Company Limited; Golden Star Resources Ltd.; HORDS LTD; Mega African Capital Limited; Mechanical Lloyd Company Plc.;   Meridian-Marshalls Holdings; MTN Ghana; Produce Buying Company Ltd.; Republic Bank (Ghana) PLC.; Samba Foods Ltd; Standard Chartered Bank Ghana Ltd.; Standard Chartered Bank Ghana PLC; SIC Insurance Company Limited; Societe Generale Ghana Limited; Sam Wood Ltd.; Trust Bank Limited (THE GAMBIA); Tullow Oil Plc; Total Petroleum Ghana Ltd; and Unilever Ghana PLC.

For example, if you invested in bonds from a private company, the company will be required to pay the principal and interests to the bond investors.

How is a Trade completed in the Stock Exchange?

A trade, or, in other words, the investment flow of any financial instrument, could be summarised as follows:

1. Sellers (supply) offer to sell a financial instrument at a price, for example, a bond issued by a company. Sellers aim to make this price as high as possible (Price 1).

2. Investors (demand) who wish to buy the bond, make an offer for a price. They want this price to be as low as possible (Price 2). Then, Price 1 is higher than Price 2.

3. Buyers interact with sellers until they are at the point where Price 1 equals Price 2. When this occurs, the financial transaction is completed, and the bond is exchanged between the seller and the buyer. For this interaction to occur, a Dealer is needed: A company that has the role of mediation between sellers and buyers, ordering prices and quantities of financial instruments. Below we explain the services that these companies provide.

What is a Stock Exchange Dealer?

Transactions of financial assets can only be completed through a company that works as an intermediary between investors and sellers. These intermediaries are known as Dealers.

Through complex technological tools, brokers manage transactions between investors, ordering the purchase and sale orders of financial assets by price and by order of arrival. By performing this service, they obtain a commission when, for example, executing buying a share.

Then, Dealers are market intermediaries, companies in which buyers and sellers interact and come together to buy stocks or bonds at the negotiated price.