Commodity ETFs boom in emerging markets increasing liquidity: Ghana to tap booming global ETF market | Ghana Stock Exchange

GOLD SILVER ETFs NEWS ~ Commodity ETFs boom in emerging markets increasing liquidity: Ghana to tap booming global ETF market | Ghana Stock Exchange

The GSE, which will launch the business with a gold ETF provided by Barclays subsidiary Absa Capital, will become the third African market to list the funds. The Johannesburg Stock Exchange began trading ETFs in 2004 followed by the Botswana Stock Exchange in 2010.

Ekow Afedzie, deputy managing director of the GSE, said the product, known as the ‘Newgold ETF’, will begin trading on the exchange in September, pending approval from Ghanaian regulator, The Securities and Exchange Commission.

He said: “We anticipate a response from the regulator in August as we are keen for other companies wishing to list their ETFs on the market to do it with us as it means more liquidity for our market."

The ETF is physically backed by gold, meaning it tracks the price of physical gold and investors can take delivery of the asset if they choose. Physically backed precious metal ETFs have seen record levels in the US and European markets as investors have sought exposure to the booming price of gold which is considered a safe haven asset in times of economic instability.

The liquid and transparent nature of ETFs, which are traded on exchanges like common stock, means they are attractive to under-developed emerging market exchanges wishing to diversify their product set and raise the exchange's profile.

Vladimir Nedelijkovic, head of investments at Absa Capital, said emerging market African stock exchanges see listing physically-backed gold ETFs, which are among the simplest ETF structures, as a means of boosting overall liquidity.

He said: “Ghana approached us to list the Newgold ETF after it saw the success in Botswana. Once we had listed the product there, liquidity doubled and this was obviously attractive to a market with low liquidity. The Newgold ETF will import much needed liquidity into the African market. Capital markets in these African countries are typically under-developed, small and have very low liquidity."

He added that Absa Capital, which currently has 50% market share of the South African ETF market, is in advanced discussions regarding rolling out the ETF on the Nigerian and Kenyan stock markets in coming months. Read More