• Yield on 364-Day T-Bill quoted a basis point higher, now at 17.91 percent.
• Accra Bourse headed southwards despite bullish earnings.
• Ghana cedi posted mix performance on the interbank currency market.
• Gold stepped up gains, lifted by global economic uncertainties.

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.

At the close of the last Friday’s auction, the yield on the 91-Day T-Bill was quoted at 14.73 percent, recording no change. That on the 182-Day T-Bill also remained flat at 15.17 percent. The yield on the 364-Day T-Bill was however, quoted a basis point higher at 17.91 percent. Interest rates on the treasury notes and bonds also remained unchanged at their respective rates on the primary market.

A total of GHS1,034.53 million was raised by the Government out of the GHS1,058.86 million bids tendered by investors. The amount raised outpaced the indicative target of GHS627.00 million expected to be raised in the week under review with the 91-Day dominating Government’s purchase; accounting for 55.31 percent of the overall bids accepted. At the upcoming auction, Government hope to raise a total of GHS540.00 million from the sale of the short-dated treasury securities. 

As market sentiment continues to pick up, the yield curve is expected to sustain its normality as this sparks confidence by reducing the risk profile of the economy. The 0.8 percentage point increment in the Bank of Ghana Composite Index of Economy Activity between December 2018 and May 2019, driven by the recent right trending of some major economic indicators, presents an opportunity to sustain the continued moderation of interest. This is on the back of its positive signal on the outlook of the domestic economy which is likely to reduce the urge to demand higher rates on treasury securities.

Ghana Stock Exchange

The Accra Bourse drove further southward despite bullish second quarter earnings by some listed companies. At the end of the half-year, the Republic Bank Ghana Ltd grew its profit-after-tax by 75 percent to GHS39.32 million; Ghana’s largest commercial bank – GCB Bank Ltd upped its net profit by 53 percent from GHS86 million to GHS131.7 million;  ADB and CAL Bank Ltd followed suite with 22.1 percent and 17.7 percent appreciation of their June 2018 profit-after-tax of GHS20.5 million and GHS80.2 million respectively. These however, failed to alter the recent risk averse adopted by majority of investors on the Ghanaian equity market following the relative attractiveness of the money market. At the closing bell, the GSE Composite Index thus recorded a week-on-week loss of 0.70 percent to settle at 2,316.33 points, representing a year-to-date loss of 9.95 percent. The GSE Financial Stocks Index also registered a week-on-week declined of 0.37 percent to settle at 2,057.23 points, representing a year-to-date loss of 4.48 percent.

Total market outturn was significantly lower than recorded in the previous week’s trade. A total of 0.21 million shares worth GHS0.24 million exchanged hands in the week under review as against the 0.69 million shares valued at GHS1.84 million traded in the previous week. MTN led the activity chart with 44.95 percent share of the overall traded volume. Market capitalization also dipped by 0.63 percent to close at GHS57,529.76 million.   

Stock Price Movements

At the pairing of the week’s opening and closing prices, a total of ten equities altered their share prices. Fan Milk Ltd topped the gainers with 12 pesewas appreciation of its share price to close at GHS4.85. The Trust Bank (Gambia) Ltd and CAL Bank Ltd also gained 8 pesewas and a pesewa to trade at 22 pesewas and 99 pesewas per share respectively.

On the downside of the market, Enterprise Group Ltd closed as the worst performing stock after losing 10 pesewas of its opening price to settle at GHS2.00 per share. Benso Oil Palm Plantation Ltd and Guinness Ghana Breweries Ltd dropped by 5 pesewas each to trade at GHS3.05 and GHS1.95 per share respectively. MTN Ghana Ltd and SIC Ltd shed a pesewa each to close at 70 pesewas and 10 pesewas per share respectively. Ecobank Transnational Incorporated Ltd and Ecobank Ghana Ltd also join the laggards after trimming a pesewa each.

Currency Market

Source: Bank of Ghana 09.08.19

Trading on the interbank currency market ended with the Ghana cedi advancing against the British pound but lost grounds versus the US dollar and the Euro. The US dollar failed to sustain its previous week’s rally, weighed by Trump’s dovish commentary on the recent interest rate cut and global economic threat arising from a rekindled trade tariff war. The 0.25 percentage point interest rate cut on key benchmark interest rate in the US was marred with daunting commentary by the US president – Trump as inadequate as it makes the dollar artificially stronger hindering manufacturing activities in the US. A rekindled trade tariff war between the US and China with the former imposing an extra 10 percent tariff on $250.00 billion worth of Chinese imports effective September 1 was rebutted with devaluation of the Chinese Yuan to affect global economic sentiment. Nevertheless, the dollar posted a week-on-week appreciation of 0.08 against the local currency as it sold at GHS5.26 last Friday. The year-to-date depreciation of the cedi thus jumped to 8.39 percent.

The British pound dropped to its lowest in a two-years on the international currency market as signs of economic recession deepens in the UK. UK’s Gross domestic product came in very disappointing to market actors as it recorded its first contraction in six-and-half years. The 0.5 percent growth rate recorded in the 1^st quarter was overturned with a 0.2 percent contraction in the 2^nd quarter of 2019, sparked by prolonged Brexit uncertainties, car plant shutdowns and the running down of stock built up before the original end of March deadline for Britain’s EU exit. Economic growth for the remaining half of 2019 is projected to slow in the event of a “no vote of confidence” against Boris Johnson in the upcoming election. The British pound thus recorded a week-on-week depreciation of 0.25 percent to trade at GHS6.36 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 2.95 percent.

The Euro worsened its outlook on the international currency market dragged by daunting economic data and an imminent monetary policy decision by the European Central Bank in the awake of the global trade tensions morphing into a currency war. Eurozone’s inflation in July declined from an annual rate of 1.3 percent in June to 1.1 percent with the second quarter GDP easing from 0.4 percent in the 1^st quarter to 0.2 percent to affect market sentiment. The growing indication by the ECB to cut its deposit rate – effective charge on bank’s idle cash – further into the negative territory (i.e. from the current -0.4 percent to forecast rate of -0.6 percent) aimed at limiting the vulnerability of the euro also negatively affected the single currency. Despite this, the Euro registered a week-on-week appreciation of 1.38 percent versus the local currency as it traded at GHS5.90 on the interbank currency market. The year-to-date depreciation of the cedi thus stood at 6.46 percent.  

International Markets

Wallstreet tumbled on account of heightened trade tension between the US and China in the week under review. The extra 10 percent tax imposition on the US250.00 billion worth of Chinese goods was equally rebutted by the Chinese government through a monetary policy adoption in the form of devaluation of the Chinese Yuan. These weighed on market sentiment and subsequently affected risk taking among investors amid boycott of an intended meeting to address the ongoing challenges. The S&P 500 thus posted a weekly depreciation of 0.46 percent to settle at 2,918.65 points. The Dow Jones Industrial Average also recorded a week-on-week decline of 0.75 percent to settle at 26,287.44 points.

On the London Stock Exchange, the FTSE 100 recorded a decline as GDP data in the UK economy contracted for the first time in 7 years signalling an imminent economic recession in the UK to affect market activities. The FTSE 100 thus shed 2.07 percent to close at 7,253.85 points.The Asian Stock Exchange closed in the red, dragged by the rekindled trade war between the US and the Chinese Government. At the close of the week’s trade, it dropped by 1.91 percent to settle at 20,684.82 point.On the African equity market, the Johannesburg All Share Index posted a week-on-week decline of 1.31 percent to settle at 55,535.24 points. The Nigerian All Share Index registered a week-on-week loss of 1.17 percent to settle at 27,306.81 points. The Nairobi All Share Index also declined by 0.19 percent to an index level of 148.05 points.

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

Brent crude oil posted a week-on-week decline following a report indicating significant decline in the demand for the energy commodity on the global market. According to data released by the International Energy Agency, demand for crude oil for the first half of 2019 has grown at its slowest pace since 2008 leading to downward review of its forecast for the rest of the year. Total consumption from January through to May 2019 increased by just 520,000 barrels a day, about half the rate seen the previous year. On the back of this, global oil demand is estimated to drop by 100,000 barrels a day to 1.1 million a day. Brent crude oil thus shed $3.36 to close at $58.53 per barrel.

Gold closed on a positive note supported by the demand shift towards safe-haven assets and the global wave of monetary policy easing amidst unattractive performances at the bond and equity markets in some major economies. The flight to safety associated with the rekindled trade tariff war, interest rate cuts anticipation among central banks of developed economies as measures of protecting domestic economic activities and falling yields on UK and Germany bonds in the trading week lifted the value of the yellow metal. Gold thus added $51.00 to trade at $1,508.50 per ounce.

Cocoa weakened further as over production of the beans by top grower – Ivory Coast continues to negatively affect its pricing on the international commodities market. Data released from Ivory Coast indicated that Cocoa Grinders boosted their manufacturing activities by 8 percent between October 2018 and July 2019, mainly on the back of bumper harvest in the region. Cocoa thus dropped by $125.00 to trade at $2,195.00 per metric tonne.

Coffee headed southwards on the international commodities market weighed by excess supply of the commodity arising from bumper harvest in top grower – Vietnam and Brazil. Coffee shed a cent to trade at 97 cents per pound.