• Yields on 364-Day T-bill and 2-Year Note raised.
• The equity market halted further declines.
• The Ghana cedi advanced against the British pound and the Euro.
• Gold fell to a three-year low as US and China made progress on trade talk.

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.

Yields on the Government of Ghana treasury securities witnessed mixed adjustment in the week under review. The yield on the 364-Day T-Bill upped by 2 basis points to 17.92 percent. Yield on the 2-Year note also rose by 50 basis points to 19.50 percent. Interest rates on the 91-Day and 182-Day T-Bills however, remained unchanged at their respective rates of 14.69 percent and 15.13 percent. Yields on the Government of Ghana treasury notes and bonds also remained unchanged as they were not scheduled for the week’s auction.

A total of GHS914.94 million was raised by the Government after accepting all bids tendered by investors. The amount raised exceeded both the week’s target of GHS700.00 million and the GHS518.27 million raised at the previous week’s auction. Government also accepted all the 2-Year treasury note bids tendered bringing total bids accepted at the auction to GHS1,529.90 million. The 2-Year Treasury Note was the most purchased bid in the week under review, constituting 49.25 percent of the overall bids accepted by the Government. An amount of GHS500.00 million is scheduled to be raised at the upcoming auction through the issuance of 91-Day, 182-Day and 364-Day T-Bills.

Illustrated in the diagram above is the term structure of the Government of Ghana treasury securities. The decision by central bank to lengthen its yield curve whiles making returns on long-dated treasury instruments more attractive as against the short-dated treasury instruments amidst improving macroeconomic indicators have contributed to the normality of the yield curve.

Ghana Stock Exchange

The equity market rebounded in the week under review spurred by impressive earnings report by some listed companies, halting the consecutive downtrend of the market indices. GCB Bank Ltd, Starwin Products Ltd, SIC Ltd, GOIL Ltd and Access Bank Ghana Ltd recorded strong financials in the period ended 30^th September 2019 when compared with their outturn in 2018. These and recoveries in Fan Milk Ltd contributed to the positive closure of the market. The GSE Compositive Index thus, upped by 0.92 percent as it settled at 2,169.48 points, representing a reduced year-to-date loss of 15.66 percent. The GSE Financial Stocks Index similarly, rebounded by 2.04 percent to end the trading week at an index level of 1,843.54 points, reflecting a year-to-date loss of 14.40 percent. 

Despite the rebound in market activities on the bourse, total market turnover was below the previous week’s records. A total of 1.25 million shares valued at GHS2.12 million exchanged hands in the week under review as against the 8.83 million worth GHS7.15 million which was traded last week. Market activities was dominated by GOIL as it accounted for 46.98 percent of the overall traded volume. Following the recovery in the market indices, the market capitalization also upped by 0.66 percent to settle at GHS55,887.93 million.

Stock Price Movements

In all, six equities recorded price movements; four advancers and two laggards. Standard Chartered Bank Ltd topped the gainers with a price uplift of 55 pesewas to trade at GHS15.55 per share. Société Générale Ghana Ltd and Ecobank Transnational Incorporated upticked by 9 pesewas and a pesewa to end the trading week at 69 pesewas and 9 pesewas per share respectively. SIC Ltd also rose by a pesewa to close at 11 pesewas per share.

On the downside, Enterprise Group Ltd had its share price dropping by 5 pesewas to trade at GHS1.60 per share. Ecobank Ghana Ltd also declined by a pesewa to end the week’s trade at GHS7.89 per share. 

Currency Market

Source: Bank of Ghana 08.11.19

The interbank currency market ended with the Ghana cedi recording week-on-week gains against both the British pound and the Euro but tumbled versus the US dollar. The US dollar on the international currency market rose to two months high on upbeat economic data. US manufacturing sector posted impressive outturn in the month of October 2019 as its index jumped to 54.7 in from 52.6 recorded in September mainly as a result of cooling trade tension between the US and China. The potential imminent redress of the long-trade dispute between the US and China also contributed to the positive closure of the greenback on the international currency market, following plans by both parties to halt tariff impositions on each other. The dollar thus posted a week-on-week appreciation of 0.42 percent against the local currency as it was sold at GHS5.36 on the interbank currency market. The year-to-date depreciation of the cedi thus upped to 10.07 percent.

The British pound tumbled on the international currency market as it lost its appeal after a policy review by the Bank of England in the week under review. The split decision by the Bank to keep its interest rate unchanged at 0.75 percent contrary to investors’ expectation, as well as, the possibility of a rate cut soon to mitigate economic slowdown also dulled market sentiment.  On the political front, the uncertainties surrounding the upcoming general election also weighed on the pound sterling. The British pound thus ended with a week-on-week depreciation of 0.65 percent to trade at GHS6.87, representing a year-to-date depreciation of 10.17 percent.

The Euro was on the defensive as mixed data from the bloc blurred investors’ true assessment of the growth outlook of the Eurozone. Germany had its factory orders rising by 1.3 percent to outpace the 0.1 percent growth projection in September but posted 0.6 percent contraction in overall industrial output against a 0.4 percent projected decline in the same period under review. These coupled with lower inflation expectation for October of 0.7 percent down from the 0.8 percent in September also affected the single currency. The Euro thus recorded a week-on-week depreciation of 0.87 percent against the cedi as it traded at GHS5.91. The year-to-date depreciation of the cedi thus rose to 6.72 percent.

International Markets

US stocks indices closed on a positive note following upbeat developments surrounding the on-going trade negotiations and signs of economic recovery in the world’s largest economy. Speculations that the US and China plans to halt tariff imposition on each other after trade deal negotiations in the week under review and data indicating an uptick in consumer sentiment as it rose to 95.7 points in November against the 95.5 points in the previous month shifted investors focus on firm financials. Technological stocks; Microsoft, Apple, and Alphabet registered gains in the week’s trade after posting bullish earnings in the three-months ending September 2019. S&P 500 recorded a week-on-week gain of 0.85 percent to settle at 3,093.08 points. The Dow Jones Industrial Average also rose by 1.22 percent to settle at 27,681.24 points.

The London Stock Exchange ended the trading week in the gains as risk taking sentiment improved following report that the US and China agreed to roll back duties in stages. This coupled with easing fears surrounding the Brexit pushed the FTSE 100 up by 0.78 percent to an index level of 7,359.38 points with Beazley PLC leading the advancers.

The Japanese Stock Exchange jumped to a 13-month high on growing optimism for the economy as Japan plans to introduce its first stimulus policies since 2016. The plans which is geared towards boosting productivity, including those at the small-scale level, buoyed market sentiment to contribute to the positive closure of the market. The Nikkei 225 thus recorded a week-on-week gain of 2.37 percent to close at an index level of 23,391.87 points. 

On the African equity market, the Nigerian All Share Index rose by 0.08 percent to close at an index level of 26,314.49 points. The Johannesburg All Share Index on the other hand, recorded a week-on-week decline of 0.06 percent to close at 56,617.02 points. The Nairobi All Share Index also went down by 2.04 percent to settle at 160.99 points.

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

Brent crude oil recorded a marginal gain after last minute report indicating that US and China made significant strides towards having a trade deal. This subdued concern of global supply glut and weakening demand in China – the world largest consumer. Brent crude oil thus rose by 8 cents to trade at $61.77 per barrel.

Gold posted its worst performance in three years as the progress made in the ongoing trade negotiation between the US and China dimmed the appeal of the yellow market. The easing uncertainties following the progressive talks shifted investors demand to risky assets. Gold thus declined by $44.15 to trade at $1,467.25 per ounce.

Cocoa managed to end the trading week on a positive note despite bumper harvest in top grower – Ivory Coast due to recent improving climatic conditions in the region. The positive closure of the soft crop followed the coalition formed by Ghana and Ivory Coast to set prices on the international commodities market. Cocoa thus added $25.00 to trade at $2,503.00 per metric tonne.

Coffee rose to a four-month high as dry weather conditions in Brazil and Vietnam sparked selling pressures on the commodities market. Coffee gained 5 cents to trade at $1.09 per pound.