1. THE ROLE OF DEALERS & INVESTMENT ADVISORS IN THE CAPITAL MARKET A Presentation By MS ABENA AMOAH, EXECUTIVE DIRECTOR SAS Strategic African Securities Ltd 2nd Ridge Link, North Ridge P O Box KA 16446, Accra Tel: +233 21 251546 – 9, 7011770 Fax: +233 21 251550, 7011774 Email: sasltd@africaonline.com.gh Website: www.sasghana.comsasltd@africaonline.com.gh MAY 27, 2004

2. AGENDA  Introduction  Capital Markets’ Structure  Dealers & Investment Advisors  Popular Misconceptions  The Media & Dealers/Advisors

3. INTRODUCTION Successful business environments require vibrant capital markets, which must provide funds that:  Are Readily Available  Are Easily Accessible  Are Relatively Cheap (Properly Priced)  Have Adequate Terms to Maturity  Can Be Re-Packaged and Exchanged

4. CAPITAL MARKETS’ STRUCTURE  Users of Funds  Providers of Funds  Dealers & Advisors (Middlemen)  Instruments/Products  Regulators Investo r Regu lator Dealer Adviso r Seeker Product

5. USERS OF FUNDS  Companies seeking growth, launching new products, retiring debt, start-ups  Municipalities undertaking projects  Investors wishing to realise their entrepreneurship  Mutual Funds & Unit Trusts  Governments

6. PROVIDERS OF FUNDS  Individuals/General Public  Pension & Provident Funds  Mutual Funds & Unit Trust  Venture Funds  Government

7. INSTRUMENTS/PRODUCTS  Bonds  Ordinary or Equity Shares  Preference Shares

8. BONDS  Long-term loans issued by credit worthy institutions  Issuer pays periodic interest to investors  Principal amount paid back to investors at maturity  Very limited market in Ghana. Examples of corporate bonds issued are HFC bonds, SSNIT educational bonds, GGiLBs

9.  Confer ownership in business  Give voting rights in General Meetings  Give right to dividends out of profits  Can be issued under private placement  Issued to general public under a public offering ORDINARY SHARES

10. PREFERENCE SHARES  Provide investor with larger dividend  Limited voting powers at general meetings  Often convertible into ordinary shares or redeemable

11. Rules & Institutions that ensure orderly & fair dealing in capital markets, especially where it involves public funds:  Rules include SIL, LI 1728, GSE Rulebook  Institutions: SEC, GSE, BoG REGULATORY ENVIRONMENT

12. Firms and Individuals licensed by regulators to :  Provide Investment Advice  Design Financial Products  Trade in Financial Products  Provide Investment Management Services DEALERS & ADVISORS

13.  Minimum Capital  Quality of Officers  Periodic Reporting  Continuous Development Requirements for Re-licensing LICENSING REQUIREMENTS

14. WHAT DEALERS/ADVISORS DO  Trade in securities on the stock exchange  Maximise wealth, minimise losses for investors Jan – Apr 042003200220012000 Volume, mil20.6496.3344.1255.3030.72 Value, ¢bil104.89389.3089.4192.2850.62 At 24/05/042003200220012000 GSE Performance 92.05%154.67%45.96%11.42%16.55%

15. WHAT DEALERS/ADVISORS DO  Raise Capital For Institutions/Government YearIssuerInstrument$ Million 1990Government of GhanaDebt13.80 1992Accra Brewery; Super Paper ProductsEquity4.70 1994Mechanical Lloyd; GoG (AGC); UTC EstatesEquity68.80 1995HFC; GoG (PAF); SSB; PZEquity18.00 1996GoG (GCB); GGL, HFC; AluworksEquity/Debt29.50 1997Mechanical Lloyd; HFCEquity/Debt3.13 1998HFC; Accra BreweryEquity/Debt8.66 1999HFC; Metalloplastica GhanaEquity/Debt4.56 2000GoG (PBC); Accra Brewery; HFCEquity/Debt60.66 2001Home Finance CompanyDebt1.72 2002HFC; Sam WoodeEquity/Debt5.59 2003GoG (CPC); CFAO; Ghana BreweriesEquity30.07 2004Accra Brewery; ClydestoneEquity5.29 TOTAL254.48

16.  Provide investment advice  Design and market products like mutual funds, unit trust, etc  Undertake and publish investment research  Provide investment management services  Provide input into capital market laws  Undertake public education WHAT DEALERS/ADVISORS DO

17. OTHER LICENSED OPERATORS These include:  Registrars  Trustees  Custodians

18. BY INVESTORS :  Market is only for rich people with huge sums to invest  Advisors are expensive  Stock market investments are speculative highly-risky investments  I can only buy shares during IPOs  I should frame my share certificates  My long-term savings must be in short- term investment products POPULAR MISCONCEPTIONS

19. BY COMPANIES THAT SHOULD LIST:  My company will be taken over if I list  Listing is very expensive  The market can’t supply the amount I want to raise  My company is worth more, past financial performance is not important in valuing my business  I have no further obligations to the public after an IPO

20.  Investigative financial journalism  Accurate reportage of financial news  Partners in public education  Investors  Continuous education MEDIA & DEALERS/ADVISORS