Available information on the performance of stocks listed on the Ghana Stock Exchange (GSE) indicates that stock prices are reaping benefits from the redenomination effects of the cedi. According to market analysts, the current bullish market which has seen the GSE all-share-index recording significant gains is therefore due to the redenomination. Over the one-year period of the cedi's redenomination, the GSE all share index increased by almost 100 percent. At 5,294.83 at the beginning of the redenomination exercise on July 3 last year, the index has inched up by 95.4 percent, closing June30 this year at 10,346.30. Stock prices began quoting in the redenominated Ghana cedi on June 8 last year, keeping decimals to four places. Early this year, the market adopted a two decimal place pricing format, rounding-off the stock prices to two decimal places. After a pre-valuation exercise, most of the listed stocks were moved onto the new format, leaving just a few stocks such as Sam Wood, CPC (Cocoa Processing Company) and SPPC (Super Paper Products Company Ltd.), which also complied at the close of trading last Wednesday. Mr. Collins Appiah, a Market Analyst at Gold Coast Securities, shares comments with B&FT on how the new price format is contributing to the performance of the index: "The redenomination gains came through from the rounding-off effect. Sam Wood, for instance, was quoted at GH¢0.0265 but when rounded-off moved to GH¢0.03, representing a 13.2 percent gain. Rounding-off TBL (The Trust Bank, Gambia) also pushed the price from GH¢1.325 to GH¢1.33 which represents some 0.37 percent gain. "In the process, some stocks rather lost margins but, taking the effect across the 34 listed stocks, the GSE all-share-index made significant net gain." He said the redenomination would not have had this effect on the index if stock prices were maintained in the four decimal place format, as was done in the first few months of the redenomination. "I am not saying this is bad, but just to explain the effect," he added. He explained that the other source of the redenomination effect on the index comes from the new lowest denomination of the cedi, which is now GH¢0.01 (old ¢100) compared to the previous currency regime. "Coupled with the new stock price format, it implies the least movement that can be recorded in a stock, whether an increase or a decrease in price will be GH¢0.01, whilst in the previous regime it could also be GH¢0.001 (old ¢10) or GH¢0.0001 (old ¢1). "This is evident in the performance of the GSE all-share-index in the first-half of the year since the two decimal place price format was adopted. It moved from 6,599.77 at the beginning of the year to 10,346.30 at the end of June, some 56.8 percent increase compared to 5,294.83 at the beginning of the redenomination in July last year to the 6,599.77 at the end of last year (representing a 24.6 percent increase), during which time period the market was still using a four decimal place price format." He pointed out that the effect is bringing huge benefits to investors at this time, and that the market is doing well - but in the same way, investors stand to lose if the performance of the market dips. Source: B&FT