The heavy loss of capital in dollar terms on the Ghana Stock Exchange in year 2000 left much bitter taste in the mouths of many investors.

When investors particularly foreign investors woke up from their investment nightmare of year 2000 following the heart breaking capital loss of about 41% in dollar terms, it was quite obvious that their appetite for investment on the local market will be seriously dampened in year 2001 or at least they were going to "wait and see".

The year 2001 took off quite slowly but not unusual and by the end of first quarter not much has been recorded in terms of trade volumes.

Investors obviously not sure of the measures the new government was going to take to address the problems that beset the economy treaded cautiously.

Even local investors who appeared encouraged by the 15% gain in cedi index were light in their activity on the market. The further rise in cost of living following the general increase in petroleum products did not help markets.

Retail investors who have mostly kept the market o n its wheels were badly hit by the increased cost of living causing a further slow down in market activity in the first quarter.

A combination of hikes in fuel prices and the lean season, fueled inflation further and by the end of the first quarter inflation increased to 42% from an end of year rate of 40%.

The first inflation in the first quarter and its associated increase in interest rates made money markets instruments more attractive. Whereas treasury bills offered on average return of about 44%, the Ghana Stock Exchange All Share Index gained only 5% during the first quarter of 2001.

Investor confidence picked up during the second quarter following improvement in macro economic indicators notably, decline in inflation and interest rates and stability of the cedi against major international currencies.

But some institutional investors were still skeptical about the efficiency of the economic prescription administered by the new government and still sat on the fence.

However the improved economic fundamentals contributed to increased volumes and value. Volume of trades recorded in the second quarter was more than double what was recorded in the first quarter.

It was not until the third and fourth quarter of 2001 that institutional investor activity becomes more pronounced. Even when they did, the level of market activity was far below what the market fundamentals justified.

Most of the listed stocks were relatively cheap on PE ratio basis in 2001 than they were in the previous year.

Indeed the market PE for 2001 was 3.2 times compared to the previous year's market PE of 4.8 liquidity situation was far better and foreign exchange crunch of year 2000 was absent in 2001yet the market could not be driven anywhere near its 1998 level, sending clear signals that the market has not fully recovered from the bearish forces that characterized 1999.

Though activities of institutional investors was not felt early enough, they were better late than never. As always, the impact was felt when they took positions.

Volume of trade-recovered shot up by almost 90% from 34.7 million in 2000 to 65.9million in 2001 with a corresponding value traded of 59.5 billion cedis and 92 billon cedis respectively. The rise in GSE all share index was more broad base in 2001than they were in 2000.

With as many as fifteen gainers and only losers and chart compare favourably with the eleven gainers and ten losers in year 2000.

And for the first time in two years, the market posted a positive dollar return of about 6% leaving foreign investors feeling good and encouraged to take stronger positions in the stock market.

INDEX GROWS STEADILY.

The GSE All Share index, the gauge that tracks share price movement on the stock market opened year 2001at 858 points and by the end of the first quarter gained as much as 41 points to 899 points mainly on the back of Aluworks.

Between January and March 2001,the index posted an average growth of about 16% over same period the previous year.

In cedi terms the index rose by 5% in the first quarter though supply exceed ed demand, indicating an overall negative pressure on share prices.

In dollar terms the index was virtually flat as the cedi was fairly stable against the dollar. The index continued to firm up in the second quarter led by continued gains in Aluworks, Enterprise Insurance, British American Tobacco and a few others which were driven by strong fundamentals, and good income prospects.

By the end of the second quarter, the index had gained an additional 33 points, representing to 933 points, representing a year to date gain of 9%. Consequently the market capitalization surged from a year open of 3,650billion cedis to 3,785billion cedis.

The third quarter was quite bullish .In the month of July alone the index gained as much as 91 points to 1024 points, representing the highest growth in the year of 24% over same month in the previous year.

Soon after the index was slashed by about 70 points on account of a bonus issue of two for one share by Outworks, which diluted the shares, price by two thirds. In the fourth quarter, the price movement was fairly mixed and as a result the index did not experience much movement.

The net change however, was a gain. From a third quarter close of 956 points the index closed the year 958 points registering a year to date gain of 12% in cedi terms and 6% in dollar terms.

Market capitalization rose by 259bilion cedis to 3,909billion at the end of the year.

TURNOVER INCREASE

The market turnover increased by almost 90% from 34.7 million shares in 2000 to 65.9 million shares in 2001.

The highest monthly traded volume of 9.9million was recorded in October and the lowest of 1.1milion shares was recorded in December.

SSB maintained its number one spot on the volume traded chart as in the previous year, a strong indication of high investor confidence in the growth and income prospects of the bank.

Pioneer Aluminum Factory and Home Finance Company ranked second and third respectively on the volume-traded chart.

Value of trades recorded was also impressive.

The total value of 92billion cedis recorded compares favourably with 59billion of trades recorded in 2000 strong price gains in Aluworks, PAF made this possible.

Once again SSB maintained its chart for the second consecutive year. Aluworks and Stanchart also accounted for substantial portions of the value traded increased by 58% indicating a marked improvement in market liquidity over year 2000.

GAINERS AND LOSERS

Pioneer Aluminum factory (PAF) topped the gainers chart with share price appreciation of almost 200%.

From a year open of 267 cedis per share, the equity jumped into full swing surge during the second and third quarter and by the end of the third quarter was trading at its record high of 800 cedis per share and remained at 800 cedis at the end of the year.

Analysts say the sharp drive of PAF from 267 cedis to 80 cedis per share was justified by strong fundamentals but speculation gave it much push.

Aluworks was the second star performer gaining the number two spot on the gainers chart with a share price appreciation of 196%.

Aluworks open year 2001 at 4350 cedis per share and by the end of first quarter was trading at about 7000 cedis per share on the strength of strong profit growth and high dividend yield. Motivated by a bonus issue of two for one shares the upward price movement of the equity continued and by the end of July, the equity was trading at its record high of 12100 cedis per share.

Upon taking account of the market adjusted the price of the equity to 4300cedis at the end of the year. PZ Ghana was the third star performer on the stock market in 2001.

From a year open of 400 cedis per share PZ closed at 1010 cedis per share at the end of 2001,registering a gain of 152.5%. The surge was underpinned by strong growth in earnings.

Other gainers were British American Tobacco up 53%, Unilever up 33%, Metalloplastica up 20% Fan milk up 18%.

The worst performing equities reduced to three in 2001 compared to as many as ten in the previous year.

Interestingly all the decliners in 2000 moved to very important positions on the gaining chart in 2001.PZ which topped the lowers chart in 2000 climbed to the number three spot on the gainers chart in 2001.

Other decliners in 2000 like BAT, UNIL and PAF climbed to very good positions on the gainers chart in 2001. A new set of decliners for year 2001 featured on the loser's chart.

Among them was Ghana Breweries Limited, which suffered a price decline 26% following two consecutive periods of negative earnings.

The other two decliners-Standard Chartered went down 5% and Produce Buying Company, went down 11%. Two equities, Guinness Ghana and Home Finance Company stayed unchanged at the end of the period.