The Securities and Exchange Commission, SEC, is considering asking listed companies trading less than 25 percent of their shares on the Ghana Stock Exchange to float more shares to reach this threshold. This seeks to increase market liquidity, which is much needed to make the market more attractive to investors. The decision resonates with the general thinking of market experts, that shares of the existing multinational companies fall short of the threshold as do most of the listed local companies.
Consequently, a correction is needed to make the shares available to local residents for trading on local residents on the exchange. SEC’s decision is also informed by the fact that market concentration, measured by the market capitalization of the top five highly capitalized stocks in deemed to be too high and this aggravates the liquidity problem when less of the stocks are available for trading.
