In 2016, Ghana’s economy grew by a paltry 3.2%, while the Ghana Stock Exchange (GSE) recorded negative growth at all levels, but the CDH Balance Fund (CDH BFund) recorded an impressive 33% growth in the face of that.
For the year ending December 31, 2016, GSE Composite Index recorded a negative return of -15.33% at 1,689.09 point; Financial Stocks Index fared worse with -19.90%, representing 1,545.41, while Market Capitalization was also lower by 7.75%, having fallen from GHC57.12 billion in 2015, to GHC52.69 billion last year.
In the face of these challenging times for the GSE, coupled with a generally declining Ghanaian economy at a paltry 3.2% growth, CDH BFund still managed to grow shareholder value by almost 33%.
Group CEO of the CDH Group, Emmanuel Adu Sarkodie has been telling Journalists the poor performance of the GSE was a reflection of challenges that faced the various companies listed on the burst last year.
The biggest losers last year included UT Bank, Ecobank Transnational, Total Ghana, Africa Champions, and Produce Buying Company among others.
He said, having observed how the listed companies were performing, CDH opted to invest more of the BFund shareholder funds into government treasury bills and other such financial instruments and that paid off.
“Government took a lot of loans for development last year so we took advantage of that and invested about 90% of the shareholder funds into that in the form of fixed deposits for our shareholders and that was how we got them the profits in the face of a declining economy,” he said.
Emmanuel Adu Sarkodee blamed the decline of businesses largely on the high cost of power and called on government to take a second look at the cost of gas sold by Ghana Gas to Volta River Authority (VRA).
He noted that power cost is depleting the gains businesses make, adding that it does not make sense for power to much more in Ghana than in Cote d’Ivoire.
The CDH Boss said Ghana has a bigger hydro-electric plant than Cote d’Ivoire and yet power cost way less in that country than in Ghana.
“We have businesses in Cote d’Ivoire and we pay about 50% less for power there than we pay in Ghana – in fact Accra City Hotel is ours and when the hotel is full we are better off using generators than using power from ECG in Ghana,” he said.
Emmanuel Adu Sarkodee believes Cote d’Ivoire is able to sell power for less because their power generating company buys gas at a way cheaper price than gas is sold to VRA in Ghana.
He is therefore calling on government to impress it upon Ghana Gas to reduce the cost of gas to VRA to enable them generate power at a lesser cost so that corporate consumers could also have some relief from power cost.
Meanwhile, at the Annual General Meeting (AGM) of CDH BFund, shareholders were impressed with the gains made by the BFund in the face of a declining economy.
In spite of the gains, the fund managers still forfeited their remuneration as they have done since the inception of the fund, but shareholder actually asked the fund managers to start paying themselves from next year, a rare request for shareholder to make.
Some shareholders and promised to move their funds from other funds with other companies into the CDH BFund.