Ghana's stock exchange expects at least four new listings this year, including a local float by oil group Tullow Plc, and predicts that inflows of new pension funds will boost trading volumes.
Ghana's All-Share index rose 32 percent last year, boosted by strong gains from its banking sector and outdoing a 19 percent rise on both the MSCI frontier markets index and MSCI Africa index.
But while the value of trades doubled to 151 million cedis last year, that amounted to barely three percent of annual turnover on Nigeria's all-share index.
The lack of liquidity has been a turn-off not only to some investors but also to firms considering an Accra listing.
However, Ghana Stock Exchange deputy managing director Ekow Afedzie said UK-listed Tullow, operator of the Jubilee offshore field that started pumping Ghana's first oil last month, was set to be one of at least four companies to float in 2011.
Oil production is going to put Ghana on the world map, Afedzie said of an initial 125,000 barrel-per-day output.
Tullow had their IPO (Initial Public Offering) prospectus approved by the regulator, so very soon, in the early part of this year, they might float shares, he told Reuters.
Tullow in Ghana was not available for comment on any schedule for a possible listing.
The advent of oil is forecast to help Ghana double its economic growth to around 12 percent in 2011, one of the strongest rates on the continent.
Afedzie said a 2008 reform, under which five percentage points of employee salaries go to privately-managed schemes chasing higher returns than those in the national scheme, was also starting to transform the local finance sector.
More institutions are being set up, custodians, fund managers, trustees will all be involved in managing funds... The one key challenge is how to get more securities on the market, more listed companies, how to increase the public float.
In a separate bid to attract foreign investors, the GSE this month extended its hours to facilitate trade in different time zones and sought to give more profile to the strong-performing banking sector with a Financial Stocks Index.
The bourse also launched from January 4 a new GSE-CI Composite Index weighting stocks according to market capitalisation and based on the volume-weighted closing price of all listed stocks. It closed on Monday at 997.75, 0.2 percent down on the year.
Aside from financials such as Ghana Commercial Bank and insurer SIC, only a handful of stocks such as dairy company Fan Milk and Guinness Ghana regularly see decent volumes.
Local traders complain that liquidity is being strangled by the buy-and-hold strategy of the state pension scheme Social Security and National Insurance Trust's (SSNIT), which has large holdings in the most sought-after shares on the index.
While the reforms are seen over time eroding SSNIT's dominance of the market, there is little evidence so far that SSNIT is rotating its holdings more frequently, despite local media reports last year that it was planning to do so.
Efedzie said he was hopeful SSNIT would start trading more actively this year. There was no comment from SSNIT itself.