Information lag, the increasing determination of prices by minority momentum investors, and the few listed companies on the stock exchange are key issues upsetting the stock market in the country, industrial players have cited. Analysts say the country’s stock market is largely unresponsive to information and stocks remain passive despite pertinent information about the performances of companies listed on the stock exchange. “Yes, it is true that there is an information-lag on our stock exchange. So we have a situation where a company releases its financial statement and nothing happens until after three or four months, by which time things would have changed,” Mr. Michael Cobblah, Country Representative, EDC Ghana, told the B&FT in an exclusive interview. He indicated that the posture of major institutional investors not to trade their stocks actively on the local bourse has left determination of the market’s performance in the hands of a minority of retail clients. “The market is made up of some people who will not trade. SSNIT and other retail investors will not trade and foreign clients will trade when they have capital gain; only 20% of shares float for the momentum investors. So you have these small retail investors who actually run the prices to determine the portfolio of those who are holding the 80%. So the 20% determine the market performance,” added Iddrisu Mahama, Head EDC Brokers Limited. With the implementation of the three-tier pension scheme, a large portfolio of long-term funds is expected to be available for the capital market to tap into. However, Mr. Cobblah believes that there must be an increase in the number of companies listed on the stock market so that liquidity can find its way into various financial instruments. “We are going to have a situation where we will have more money chasing fewer stocks if we do not have a lot more companies listed. Once you have liquidity, that liquidity must find its way somewhere. The auction at the Treasury-bill market is always oversubscribed because everybody is pushing money there. There is only so much government can absorb in a week, so other instruments will have to come into play.” He foresees a situation where aggressive measures may have to be employed to get companies to list on the stock exchange. “So we will have a situation where people will have to be more aggressive to get more companies listed on the stock exchange, and also fund managers will have liquidity to play with on the market.” In the short- to medium-term, Mr. Cobblah believes that education and training are key in tackling the challenges that confront the stock market. Securities and Exchange Commission (SEC) boss Adu Anane Antwi in an interview with the B&FT proposed the institutionalisation of a capital market local-content policy that would require companies operating in the banking, insurance, mining, telecommunications and oil and gas industries to float part of their shares on the Ghana Stock Exchange (GSE) after five years of operation Mr. Antwi also proposed that state-owned enterprises and statutory bodies be mandated to raise at least 25% of their loan/capital needs from the domestic bond market, and asked for tax exemption on interest and dividends paid to investors in listed bonds and equities. He said local authorities should begin to issue municipal bonds to raise money to finance their development plans, as happens in most developed economies. Selling bonds, however, would require localities to pick profitable projects and become more efficient in the use of their resources. “Well-resourced local government authorities like the Accra, Tema, Sekondi-Takoradi, Tamale and Kumasi Metropolitan Assemblies should be encouraged to issue municipal bonds to raise capital for their developmental projects,” Mr. Anane-Antwi said this week.