Agriculture Development Bank’s [adb] recently failed initial Public Offer [IPO] of shares could deter investors, especially foreign investors from committing funds to the equity market.
The foundations of financial markets which operate successfully on fairness and equity could be shaken as a result of the failed second attempt of ADB’s IPO.
Although adb managed to raise capital in excess of the minimum required capital of GHS 100 million for banks, the Board of Directors of the bank rejected the IPO results as a result of shares sold to investors at a discounted price of GHS 2.00 instead of the proposed GHS 2.65 during the IPO period.
The failed IPO which has led to many investors registering their displeasure could spell doom and gloom for the managers of the Accra bourse. Liquidity of shares could reduce if investors decide to pull out of the equity market. The influx of foreign investment onto the capital markets and the banking sector of the economy could be stalled as a result of a lack of transparency and dwindling confidence in the financial integrity of the banking and finance sector in Ghana.
GN Analysts posit that the failed IPO of adb could negatively impact the image of the equity market and market returns in the long term. Proper controls to prevent such occurrences in the future are vital to the efficiency of the operation of the capital market and the boosting of investor confidence.
Trading activity on the bourse ended with 4 gainers [ALW, CAL, EGH & GCB] and 3 losers [ETI, HFC & UNIL] yesterday. ETItopped trading chart as 17,100 shares worth GHS 3,113.00 changed hands. Returns on the Composite and Financial Stock Index pegged at-12.39% and -15.02% respectively.
On the Ghana Alternative Market
Activity on the GAX saw 8,500 shares of HORDS worth GHS 850.00 change hands yesterday.
HORDS currently lead record capital gains on the GAX, appreciating by 25% from year open.
On the Currency market
The Cedi lost to all the major trading currencies yesterday.
The local currency exchanged at a mid-rate of GHS 3.8577 to the USD, GHS 5.6160to the GBP and GHS 4.3827 to the EURO.
The GCFM Cedi index, a measure of the holistic performance of the Cedi on the interbank market now records a year-to-date depreciation of 2.68%.
African Eye Report
