• Yields on 91-Day and 182-Day T-Bills slashed by a basis point each.
• Accra Bourse recorded another week-on-week decline.
• Ghana cedi depreciated against all the three major trading currencies.
• Global equity market revived as 1^st phase of trade talks ended successfully.
• Brent crude oil advanced on supply cut decision but Gold tumbled on signs of risk sentiment recovery.

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.

The Government of Ghana treasury securities recorded rate moderation in the week under review. At the closing bell, the yield on the 91-Day T-Bill eased by a basis point to settle at 14.69 percent. The yield on the 182-Day T-Bill also dropped by a basis point to 15.14 percent but that on the 364-Day T-Bill remained unchanged at 17.91 percent. Interest rates on the Government of Ghana treasury notes and bonds also remained unchanged as they were not scheduled for the week’s auction.  

An amount of GHS600.76 million was raised by the Government after accepting all bids tendered. This fell below the week’s target of GHS678.00 million but exceeded the GHS404.11 million raised in the previous week’s trading. The 91-Day T-Bill was the most purchased bid, constituting 93.84 percent of the total bids accepted by the Government. An amount of GHS632.00 million is expected to be raised by the Government in the upcoming auction from the sale of the 91-Day, 182-Day and 364-Day T-Bills.  

The yield curve sustained its normality as largely expected and this paints a positive picture of the domestic economy as an upward trending curve denotes an economy with growth potentials. Commitment by the Bank of Ghana to make long-term investments more attractive than their short-term counterparts and the prolonged bearishness of the capital market sparking demand drift onto the money market are some factors contributing to the maintenance of the yield curve.

Ghana Stock Exchange

The Accra Bourse sustained its bearish run as significant selling pressures recorded in some financial and energy sector stocks dragged the equities indices lower. The ill-sentiments arising from the banking sector clean-up and investors anxiousness ahead of the release of the third quarter financials of listed companies are some contributory factors responsible for the slide on the Bourse. At the end of the week’s trading activities, the GSE-Composite Index dipped by 128 basis points to settle at 2,173.16 points, representing a year-to-date loss of 15.51 percent. The GSE-Financial Stocks Index also posted a week-on-week decline of 1.89 percent as it settled at 1,844.16 points, corresponding to a year-to-date loss of 14.37 percent.

Market activities slowed down in the week under review. A total of 0.33 million shares valued at GHS0.30 million exchanged hands as compared to the 16.37 million valued at GHS12.11 million recorded in the previous trading week. Ecobank Transnational Incorporated Ltd was the most actively traded stock as it accounted for 40.24 percent of the overall traded volume. Market capitalization dropped further by 0.81 percent to settle at GHS55,760.26 million.

Stock Price Movements

A total of eight equities altered their week opening prices. Fan Milk Ltd was the lone advancer recorded on the Bourse, it recovered 3 pesewas of its recent losses to trade at GHS4.53 per share.

Standard Chartered Bank Ltd was the worst performing stock on the bourse, losing 51 pesewas to trade at GHS16.00 per share. Ghana Oil Company Ltd followed suite with 25 pesewas decline to close at GHS1.75 per share. CAL Bank Ltd and Ecobank Ghana Ltd shed 6 pesewas and 3 pesewas to trade at 82 pesewas and GHS7.92 per share respectively. SIC Ltd, Ecobank Transnational Incorporated and GCB Bank Ltd also joined the laggards after losing a pesewa each. 

Currency Market

Source: Bank of Ghana 11.10.19

The Ghana cedi was on the defensive as it depreciated against all the three major trading currencies. The US dollar lost its shine on the international currency market on account of trade truce between the US and China. This follows reports of renewed commitment by both parties in addressing the prolonged trade deal which buoyed risk taking among investors and downbeat economic data which signalled an imminent recession. Furthermore, lower inflationary pressure as core inflation steadied at an annual rate of 2.4 percent in September and the lower-than-expected weekly job creation of 210,000 versus 219,000 dimmed the outlook of the dollar. The US dollar, however, appreciated by 0.12 percent to trade at GHS5.33 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 9.43 percent.

The British pound posted a strong rebound on the international currency market following positive development surrounding the ongoing Brexit negotiation. The pound sterling rose above a one-month low following hawkish commentary from both the UK and Irish Leader – Leo Varadkar on efforts at reaching a compromise on the Irish backstop as this marked a major milestone for a smooth Brexit transition. This raised investors’ expectation of UK securing trade deal before the 31^st October deadline. The British pound thus registered a week-on-week appreciation of 3.37 percent as it traded at GHS6.76 on the interbank currency market. The year-to-date depreciation of the cedi thus widened to 8.63 percent. 

The Euro jumped to three weeks high after the week’s trading activities on the international currency market. This followed upbeat development surrounding the ongoing trade negotiation between the US and China as its success is a litmus test for trade negation between the US and the European Union. The Euro was further boosted by the recovery in treasury yields in Eurozone’s largest economy – Germany and a softer dollar. The Euro ended with a week-on-week appreciation of 0.63 percent as it traded at GHS5.88 leaving the local currency with a year-to-date depreciation of 6.16 percent.

International Markets

US equity market ended the trading week on a positive note spurred by the trade truce between the US and China. Hawkish commentary by the US president – Donald Trump that a substantial phase-one trade deal with the Chinese counterpart in the areas of intellectual property, financial services and large agricultural purchases buoyed market sentiment in the week under review. The S&P 500 thus posted a week-on-week gain of 0.62 percent to settle at an index level of 2,970.27 points. The Dow Jones Industrial Average similarly registered a week-on-week gain of 0.91 percent to end the trading week at 26,816.59 points.

The London Stock Exchange posted a strong recovery following positive developments surrounding the Brexit negotiation. Reports indicating that the UK and European Union have made significant strides in addressing the Irish Border disputes and the high potential of securing a trade deal before the 31^st October deadline revived market sentiment on the bourse. The signs of a resolution to the trade dispute between the US and China also contributed to the positive closure of the market. The FTSE 100 thus upped by 1.28 percent to settle at 7,247.08 points last Friday.

The Japanese Stock Exchange rose to its highest in one-and-half weeks after the first phase of the trade negotiation ended successfully, signalling an imminent solution to the prolonged trade dispute. The Nikkei 225 thus recorded a week-on-week gain of 1.82 percent as it settled at 21,798.87 points with stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors leading the advancers.

On the African market, the Johannesburg All Share Index rebounded by 2.86 percent to end the week’s trading at 55,537.02 points. The Nairobi All Share Index also posted a weekly gain of 0.28 percent as it settled at 147.64 points last Friday. The Nigerian All Share Index on the flip side, dropped by 1.68 percent to close at 26,533.78 points.

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

Brent crude oil surged on the international commodities market spurred by decision by OPEC to downwardly review its supply forecasts from 2.25 million barrels per day to 2.20 million per day. The upward drive of the energy commodity also steamed from the rekindled tension in the middle east after Iranian tanker was attacked in the week under review. Brent thus rose by $2.14 to close at $60.51 per barrel.  

Gold tumbled as global risk-taking sentiment improved in the week under review. Major strides in the ongoing US-China negotiation, UK’s ability to partially address the Irish border dispute prior to the Brexit deadline and rebound in treasury yields in advanced economies negatively affected the demand of the yellow metal as they improved risk sentiment among investors.  Gold thus eased by $24.20 to trade at $1,488.70 per ounce.

Cocoa surged in the week under review following improved climatic conditions in top growers – Ivory Coast and Ghana. The soft crop also benefited from the price floor measures adopted by Ivory Coast and Ghana which is geared towards protecting the livelihood of farmers. Cocoa thus rose by $31.00 to trade at $2,506.00 per metric tonne.

Coffee retreated to a nine-year low on the international commodities market as the fall in the value of the Brazilian real and the ripple effects of the global glut due to uncontrolled level of production in Vietnam and Brazil weighed on the soft crop. Coffee shed 5 cents to close at 94 cents per pound.

Note: The data in this publication is Friday on Friday (w/w)