“Investment funds to face hard times” (27/06/09)

THE Executive Director of HFC Investment Services, Mr Joseph Nketsiah has stated that this year will prove exceptionally difficult for investment funds in the country.
He said returns from investment funds like all other investments would be hard hit as the result of the current global financial crisis.
“Ghana as a major recipient of donor inflows and primarily a commodity exporter will find it difficult to avoid the much anticipated world wide recession this year”, Mr Nketsiah stated.
He said this at the company’s Annual General Meeting (AGM) in Accra to present the 2008 annual reports and financial statements of HFC’s Unit Trust, Equity Trust and Real Estate Investment Trust (REIT) funds.
Mr Nketsiah said the effect of the global financial crises on the Ghanaian economy was expected to be much visible this year as the Ghana Stock Market had already received its fair share of the turmoil in the global capital markets through market corrections and depreciation in stock prices.
He said the Ghana Stock Market was expected to see further turbulence when investors’ outstanding sale orders were executed.
This he said could trigger a downward movement in the prices of the respective stocks, adding that, as an exchange that had enjoyed huge patronage of foreign investors, it stood to suffer from the effects of the global financial crisis on the foreign investors as they sought to sell their stake in most listed companies, in order to realise their capital gains.
Mr Nketsiah said government’s commitment to achieve set macro economic targets had led to strong and positive expectations by both businesses and consumers about the prospect of the economy in 2009.
“We expect that government’s policy of curbing spending in the economy through tightening its monetary policy will hold interest rates relatively high throughout the year”, he stated.
Presenting the annual report on HFC REIT for 2008, he said the year saw a slowdown in development in the real estate sector as compared to the previous year adding that, it was the result of the slowdown in the global economy.
He said the fund completed construction and sold four two-bedroom semi-detached houses, four four-bedroom two-storey up-mark houses and had began work on two four-bedroom duplex houses.
Mr Nketsiah said the fund awarded contract for work to begin on the construction of a 30 two-bedroom semi-detached houses.
He said these activities helped the fund to achieve a yield of 28.97 per cent for 2008 as compared to 17.5 per cent for 2007, adding that, the fund value increased from GH¢1.4 million to GH¢1.71 million.
Touching on the Equity Trust fund, he said there was an improvement in the net fund value by 323.93 per cent from a value of GH¢0.95 million to GH¢4.03 million by the end of 2008, adding that, the fund posted a yield of 38.80 per cent to close the year.
He said this represented an all time high return since 2005 and a performance which competed favourably with other schemes in the country.
On Unit Trust, Mr Nketsiah said the fund posted an annualised yield of 18.70 per cent at the end of the year, compared with 12.75 per cent recorded within the same period in 2007.
He said this meant that a GH¢1,000 investment made in January 2008 would have become GH¢1,187 in December 2008.