• Government eyes GHS14.34 billion from the primary market.
• Interest rate on 182-Day T-Bill raised by 2 basis points, others left unchanged.
• Accra Bourse drifted further southwards.
• Ghana cedi recorded another round of weekly depreciation against all three major trading currencies.
• Cocoa rebounded as EU supports price floor initiative.  

Government eyes GHS14.34 billion from the primary market

The Government of Ghana is set to raise an amount of GHS14,337.00 million from the primary market between September 2019 and November 2019. The issuance is in sync with the Net domestic financing enshrined in the 2019 Mid-Year Revised Budget and the Medium-Term Debt Management Strategy (MTDS) for 2019 – 2022. Proceeds worth GHS13,645.56 million are expected to be used to rollover matured securities and the remaining to finance its expenditure needs. Between September 2019 and November 2019, Government has strong appetite for short-dated treasury securities with an amount of GHS7,750.00 million scheduled to be raised through the issuance of bills across the 91-Day to the 364-Day Bills. The 20-year bond is also expected to be issued on investors request to an amount of GHS287.87 million. The remaining amount of GHS6,299.13 will be raised from the sale of the 2-year note to the 7-year bond.

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.

Interest rate on the Government of Ghana, securities recorded mixed adjustment in the week under review. The yield on the 91-Day and 364-Day T--Bills remained unchanged at 14.70 percent and 17.91 percent respectively. Interest rate on the 182-Day T-Bill however, upped by 2 basis points to 15.14 percent. Yields on the treasury notes and bonds however, remained unchanged at the primary market.

An amount of GHS716.43 million was raised by the Government of Ghana after accepting all the bids tendered at the auction. This missed the GHS723.00 million target and fell below the GHS1,024.30 million raised at the previous auction. The 91-Day T-Bill continued to dominate Government purchase, constituting 88.04 percent of the total bids accepted. Government hopes to raise GHS843.00 million at the upcoming auction through the sale of the short-dated treasury securities.

The normality of the yield curve as expected was sustained after the week’s auction despite the marginal adjustment recorded on the short-dated treasury securities. The continued investor confidence in the domestic economy on the premise of right trending of major economic indicators are strong determinants for the sustenance of the yield curve. The GHS14.34 billion targets for the three months from September may not necessarily result in rate hikes on the treasury instrument; following the relative attractiveness of the sector to others which are currently characterised by high level of uncertainties affecting their optimal performances.  

Ghana Stock Exchange

The Accra Bourse recorded another round of bearish closure with the market indices drifting deeper southwards. The ill sentiments associated the recent banking sector clean-up exercise with its ripple effects on other sectors of the economy are some factors mounting sell pressures on the bourse. The GSE Composite Index thus dropped by 112 basis points to an index level of 2,231.22 points, corresponding to a year-to-date loss of 13.26 percent. The GSE Financial Stocks Index, similarly, went down by 205 basis points to close at 1,915.51 points, reflecting a year-to-date loss of 11.06 percent. 

At the close of the week’s trading activities, total market turnover was significantly lower than the previous week’s outturn. A total of 481,219 shares valued at GHS385,393.78 exchanged hands in the week under review, representing 96.81 percent decline from the previous week’s volume. MTN Ghana Ltd led the activity chart, accounting for 65.60 percent of the overall traded volume. Market capitalization also dropped by 0.46 percent following the downward movement of the market indices to settle at GHS56,688.17 million

Stock Price Movements

A total of six equities recorded price change after pairing the week’s opening and closing prices. Total Petroleum was the lone advancer, it gained a pesewa to close at GHS3.06 per share.

Standard Chartered Bank Ltd was the worst performing stock on the bourse after the week’s trading activities. It trimmed 99 pesewas of its opening price to trade at GHS17.01 per share. Fan Milk Ltd and Ecobank Ghana Ltd dropped by 34 pesewas and 15 pesewas to end the week’s trade at GHS5.13 and GHS7.99 per share respectively. Enterprise Group Ltd and CAL Bank Ltd also suffered a loss of 5 pesewas each to close at GHS1.75 and 85 pesewas per share respectively.

Currency Market

Source: Bank of Ghana 13.09.19

On the interbank currency market, the Ghana cedi lost its footing against all the three major trading currencies. The US dollar closed on a positive note lifted by upbeat economic data from the US and demand drift activities on the international forex market. US retail sales data for August came in much stronger than expected as it jumped by 0.4 percent beating the 0.2 percent forecast. Core inflation improved significantly in August, posting an annual rate of 2.4 percent from a previous value of 2.1 percent. The employment   sector also added about 204,000 people in the week under review, signifying one of the healthiest records in about half a century. These better-than-expected data which showed signs of economic recovery in the world’s largest economy closed the dollar in the gains. The US dollar thus recorded a week-on-week appreciation of 0.08 percent as it traded at GHS5.31 on the interbank currency market. The year-to-date depreciation of the cedi/dollar pair thus rose to 9.18 percent.     The British pound rebounded to seven weeks high on the international currency market as latest development surrounding the Brexit lifted investors’ hope to boost demand for the currency. Developments suggesting an amicable resolution of the Irish border between the UK and the European Union and successful legislative backing to avoid any disorderly Brexit as UK’s parliament voted against Boris Johnson’s government from taking Britain out of the European Union on Oct. 31 helped close the pound in the gains. Positive data from the labour market as unemployment data improved to 3.8 percent in July from a previous year’s value of 4.0 percent and annual wage earnings upped by 4 percent buoyed demand for the dollar. The British pound thus appreciated by 1.23 percent to trade at GHS6.61 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 6.63 percent.

The Euro dropped to a two-year low after the European Central Bank downgraded key economic indicators and adopted strong dose of stimulus initiatives in a bid to spur economic activities. In the Eurozone, GDP for 2019 and 2020 were lowered and now expected to grow at 1.1 percent and 1.2 percent respectively with similar downgrades for headline inflation. The ECB also rolled out quantitative easing programme commencing next month and expected to run until inflation picks up to its target of 2 percent. These affected the euro’s outlook against its peers on the international currency market. Despite the Euro’s loss, it appreciated by 0.34 percent to trade at GHS5.88 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 6.22 percent.

International Markets

Major stock indices on the US Wallstreet closed on a positive note buoyed by rising interest rates on money market instruments and thawing in the trade tension between the US and China. The US 10-year bond which rose from 1.791 percent to 1.899 percent in the week under review sparked a rebound of US yield curve to improve market sentiment. The S&P 500 thus rose by 0.96 percent to settle at 3,007.39 points with the top three stocks being Cimarex Energy Co., Pioneer Natural Resources Co., and Freeport-McMoRan Copper and Gold Inc. The Dow Jones Industrial Average similarly advanced by 1.58 percent to settle at 27,219.52 points with Dow Inc., United Health Group Inc. JP Morgan Chase & Co as the best performing stocks.

The London Stock Exchange posted another round of positive closure as upbeat sentiment surrounding the Brexit lifted the indices to two months high. The rising possibilities of UK breaking away from the European Union after a resolution to Irish Border buoyed investors’ sentiment. The FTSE thus rose by 1.17 percent to settle at 7,367.46 points with the mining sector leading the advancers.

The Japanese Stock Exchange closed higher driven by the bilateral trade agreement between Japan and US as the latter phase out tariff imposition on imported wines increased risk appetite of investors. The Nikkei 225 rose by 1.17 percent to settle at 21,988.29 points with stocks from the Paper & Pulp, Railway & Bus and Real Estate sectors leading market activities.

On the African equity market, the Johannesburg All Share Index ended with week-on-week gain of 2.76 percent to settle at 57,123.78 points. The Nigerian All Share Index rebounded by 2.33 percent to settle at 27,779.00 points. The Nairobi All Share Index also surged by 1.29 percent to settle at index level of 143.81 points.

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

Brent crude oil tumbled despite OPEC’s decision to cut global supply of the energy commodity onto the international commodities market. In an attempt to prevent a supply glut of the energy commodity, OPEC in the week under review asked Iraq and Nigeria to cut output by 175,000 bpd and 57,000 bpd respectively but failed to yield the needed results as concerns about global growth and easing demand affected the price of the blackgold. Brent crude oil thus shed $1.32 to trade at $60.22 per barrel.

Gold posted a decline on the international commodities on bullish employment and consumer inflation data from the US which buoyed risk appetite among investors. Gold thus dropped by $16.00 to trade at $1,499.50 per ounce.   

Cocoa ended the trading week in the gains as the European Union backed the Ghana-Ivory Coast initiative. A senior European Union Official affirmed the unions support of the yet to be implemented “living income differential” levy which is to protect the livelihood of farmers. Cocoa thus added $22.00 to trade at $2,296.00 per metric tonne.

Coffee rose to a one-and-half month high on the international commodities market as dry conditions in Brail sparked speculation of production declines in the 2020/21 crop season. This coupled with continued recovery of the Brazilian real lifted the value of the soft crop by 6 cents to settle at $1.03 per pound.