Listed equities had a fantastic year in 2017, returning 53% and putting an end to 2 consecutive years of negative returns. The bull market continued into 2018, as at the end of April, equities had returned more than 35%.

However, stocks have returned only 11.7% by the close of trading in the first half of the year. The market capitalisation is below where it started this year as shown in the chart below.

Month on month returns have been negative for the last 2 months of Q2 as shown below.

What could have accounted for this? One view from Bloomberg suggests that investors are selling shares to raise funds for the MTN IPO. I find that plausible but not a good development for our stock market. There is too much capacity for new money to flow into the stock market for MTN to start cannibalising existing stocks. What I want to see is the MTN IPO attracting new money into the stock exchange, not a transfer of investment from some equities into MTN.

Instead of crafting narratives (which I think finance writers do a bit too often) I’m going to show the performance of all companies in the first half of the year.

While we all wait for MTN to come improve the performance and liquidity of the market, we have to hope that the GSE does not essentially become a one-equity market. The lure of the stock market has always included an opportunity for diversification. That should not change with the MTN listing.