• Interest rates on Government of Ghana treasury securities unchanged.
• GSE posted gains on the last trading week of August. 
• Ghana cedi advanced against the British pound and the Euro but lost versus the US dollar.
• Brent crude oil, Cocoa and Coffee upticked on the international commodities market.

Source: BOG; MOFEP; GSS.     * represents provisional estimate

Government of Ghana Treasury Securities

NB: The above are the annual yields on Government of Ghana Treasury Securities.

Last Friday, the yield on the Government of Ghana treasury securities remained unchanged. The yield on the 91-Day T-Bill was still quoted at 14.68 percent whereas that on the 182-Day and 364-Day T-Bills at 15.14 percent and 17.92 percent respectively. The yields on the GoG treasury notes and bonds also remained unchanged at the primary market.

At the auction, Government raised GHS467.19 million after accepting all bids tendered by investors. The amount raised missed the week’s target of GHS641.00 million and fell below the GHS718.26 accepted by Government at the previous auction. The 91-Day T-Bill dominated Government’s purchase, accounting for 74.61 percent of the overall bids raised. An amount of GHS966.00 million is scheduled to be raised in the upcoming auction from the insurance of the 91-Day, 182-Day and 364-Day T-Bills.

The yield curve as expected sustained its normality following recent developments in the domestic economy. The right trending in major economic indicators including inflation, gross domestic product and improving fiscal space has subdued the possibility of a significant hike in yields of treasury instruments despite rising demand for funds by Government. The bearish outlook of the capital market, with its ripple effects on other alternative investments vehicles, have also left investors with few alternatives such as the money market; hence the relative stability of the yields curve.

Ghana Stock Exchange

The Accra Bourse recovered some grounds on the last trading week of the month, spurred by corporate actions in Ecobank Transnational Incorporated and continued trickling of positive half-year financials. The GSE Composite Index upped by 150 basis points to end the week’s trading at an index level of 2,303.80 points with a corresponding year-to-date loss of 10.44 percent. The GSE Financial Stocks Index also posted a week-on-week gain of 107 basis points as it ended the week’s trade at an index level of 1,999.73, reflecting a reduced year-to-date loss of 7.15 percent.

Market outturn compared favourably with the previous week’s trade. This was driven by the successful acquisition of shares held by International Finance Corporation (IFC) – a member of the World Bank Group – by Arise B.V. – a leading equity investor in Sub-Saharan Africa – in Ecobank Transnational Incorporated. A total of 3.49 billion shares valued at GHS35.22 billion exchanged hands, representing about two hundred thousand percent increment over the previous week’s trade in terms of volume. ETI recorded the highest traded volume of shares, as it accounted for 99.74 percent of the overall traded volume on the back of the disposal sale by IFC. MTN Ghana Ltd followed suit as the most actively traded stock, as it accounted for 98.47 percent of the 9.21 million shares that exchanged hands excluding the disposal sale of shares in ETI. 

Stock Price Movements

A total of 11 equities saw price changes; 5 advancers and 6 laggards. GCB Bank Ltd led the bulls run with price appreciation of 38 pesewas to close at GHS4.90 per share. Access Bank (Ghana) Ltd followed suite with price uplift of 9 pesewas to trade at GHS2.99 per share. The Trust Bank (Gambia) Ltd and MTN (Ghana) Ltd upped their share prices by 4 pesewas and 2 pesewas to trade at 40 pesewas and 72 pesewas per share respectively. Ecobank Transnational Incorporated Ltd also lifted its share price by a pesewa to close at 11 pesewas per share.

On the flip side, Unilever Ghana Ltd recorded the highest decline of 20 pesewas to trade at GHS16.80 per share. Ecobank Ghana Ltd and Standard Chartered Bank Ltd fell by 9 pesewas and 8 pesewas to settle at GHS8.25 and GHS18.00 per share respectively. Société Générale Ghana Ltd and PZ Cussons shed 2 pesewas and a pesewa of their opening prices to trade at 70 pesewas and 39 pesewas per share respectively. Fan Milk Ltd also dropped by a pesewa to close at GHS5.49 per share.  

Currency Market

Source: Bank of Ghana 30.08.19

The interbank currency market ended with the Ghana cedi advancing against the British pound and the Euro but lost its footing versus the US dollar. The US dollar held onto its gains on the international currency market despite daunting economic data signalling an imminent economic recession in the world largest economy. US’ GDP was downwardly revised for the second quarter of 2019 to 2.0 percent from the earlier estimate of 2.1 percent which fell significantly below the 1^st quarter reading of 3.1 percent. Inversion of the US yield curve following the significant decline in yields on the 10-year bond vis-à-vis a rise of the yield on the 2-year bond were some economic factors that sparked concerns of possible economic recession but was unable to overturn the greenback’s gains; arising from the safe-haven sentiment spurred from the heightened trade war between the US and China. The US dollar thus appreciated by 0.08 percent to trade at GHS5.28. The year-to-date depreciation of the cedi thus increased to 8.74 percent.

The British pound posted a week-on-week decline on the international currency market driven by Boris Johnson preventing the opposition party from using legislative avenues to avert the possibility of Britain leaving the European Union without a favourable trade deal by the 31^st October deadline. Boris moved to suspend parliamentary sitting by a month and Queen Elizabeth’s subsequent ratification to this decision sparked outcry to sap demand for the pound on the international currency market. The British pound thus fell by 0.53 percent as it traded at GHS6.43 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 4.03 percent. 

The Euro dimmed its outlook on the international currency market as data suggesting economic slowdown within the bloc continued to affect market sentiment. Eurozone’s largest economy – Germany posted the worst economic outturn in the bloc with overall economy contracting by 0.1 percent in the 2^nd quarter from a previous rate of 0.4 percent. Germany’s inflation slowed to 1.4 percent in August from 1.7 percent recorded in July with unemployment rate also recorded some upsurge. The Euro thus saw 1.13 percent depreciation on the interbank currency market as it traded at GHS5.81. The year-to-date depreciation of the cedi thus stood at 5.11 percent.

International Markets

The US Stock market closed on a positive note supported by hopeful rhetoric on the trade front by top officials in China and decision by the US government to help end the trade dispute. Stocks within the Basic Materials, Telecoms and Industrial sectors were the biggest gainers on the bourse. The S&P 500 Index thus jumped by 2.79 percent to an index level of 2,926.46 points, representing a positive year-to-date return of 16.74 percent. The Dow Jones Industrial Average also recorded a week-on-week rise of 3.02 percent as it settled at 26,403.28 points, representing a year-to-date gain of 13.19 percent.

The London Stock Exchange posted a week-on-week gain as positive sentiment in the bid to address the long global trade dispute lifted the indices higher. This coupled with the pound’s weakness on the international currency market sparked buying activities by multinational investors. The FTSE 100 thus upped by 1.58 percent to settle at an index point of 7,207.18 points, corresponding to a year-to-date gain of 7.12 percent.

The Japanese Stock Exchange finished the trading week in the red despite the trade truce buoying market activities last Friday. The negative week-on-week closure of the market followed ill sentiment characterising the market as China retaliated to the US recent tariff imposition. The Nikkei 225 thus declined by 6.54 percent to settle at 20,704.37 points, representing a reduced year-to-date gain of 3.45 percent.

Mixed outturns were observed on the African equity market. The Johannesburg All Share Index climbed further by 2.34 percent to settle at 55,259.57 points but the Nigerian All Share Index dipped by 0.99 percent to settle at 27,525.81 points. The Nairobi All Share Index also recorded a week-on-week decline of 1.53 percent to settle at 147.58 points.

Source:www.bloomberg.com, & www.investing.com

Brent crude oil was priced much higher on the international commodities market as looming hurricane in the US caused officials to announce a shut-down in about 74 percent of its production lines. Brent crude oil which rose on account of the supply cut associated with the production shut down also received a boost from the US-China plans to address the trade war tariff. Brent crude oil went up by $1.09 to trade at $60.43 per barrel.

Gold lost its shine on the international commodities market as a rebound in the US dollar amidst rising risk sentiment on the global equity market following a commitment by the US and China to resolve the long tariff reduced demand for the yellow metal. Gold thus traded $8.20 lower at $1,529.40 per ounce.

Cocoa recorded a price uplift on the international commodities market despite concerns of lower-than-expected rains in top grower – Ivory Coast. Prospects ahead of the new crop season which spans from October to March rainfall in Ivory Coast appears less favourable for the soft crop, hence limiting expected production. Cocoa thus added $5.50 to trade at $2,213.50 per metric tonne.

Coffee upped its value after the week’s trade on the international commodities market buoyed by expectations of lower-than-expected supply from top growers – Vietnam and Brazil. Coffee added a cent to trade at 94 cents.