• Interest rate on the 91-Day T-Bill trimmed by a basis point.
• Accra Bourse extended bearish run into the new month.
• Ghana cedi outmuscled the Euro but depreciated against the US dollar and British pound.
• Global equity market down on signs of recession in advanced economies.  
• Cocoa upped on production cut decision by top growers.

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 91-Day T-Bill dropped by a basis point to settle at 14.68 percent. Interest rates on the 182-Day and 364-Day T-Bills however, remained unchanged at 15.51 percent and 17.91 percent respectively. Yields on the GoG treasury notes and bonds also remained unchanged as they were not scheduled for the week’s auction.  

At the auction, Government accepted all the GHS404.11 million worth of bids tendered by investors. The week’s target of GHS686.00 million was missed with the 91-Day T-Bill dominating Government’s purchase with 62.15 percent share of the total bids accepted. At the upcoming auction, an amount of GHS678.00 million is scheduled to be raised from the sale of 91-Day and 182-Day T-Bills.

Illustrated in the diagram above is the term structure of the Government of Ghana treasury securities. The yield curve sustained its normality as the rate adjustment observed on the short-dated treasury securities were marginal and still lower in comparison with yields on the medium to long term treasury instruments. The current upward sloping of the yield curve is expected to be sustained as business and consumer confidence remains robust.

Ghana Stock Exchange

The Ghana Stock Exchange extended its bearish run into the new month driven by the significant sell-off recorded by some consumable and financial sector stocks. At the closing bell of the week’s trading session, the benchmark Composite Index dropped by 37 basis points to an index level of 2,201.40 points, corresponding to a year-to-date loss of 14.42 percent. The GSE Financial Stocks Index also posted a week-on-week decline of 7 basis points as it settled at 1,879.60 points, representing a negative year-to-date return of 12.73 percent.

At the closing bell, total traded volume stood at 16.37 million valued at GHS12.11 million. This was significantly below the previous week’s outturn of 27.99 million valued at GHS20.15 million. MTN Ghana Ltd led the activity chart with 98.69 percent share of the overall traded volume. Market capitalization dropped further by 0.15 percent as it settled at GHS56,216.02 million last Friday.

Stock Price Movements

At the pairing of the week’s opening and closing prices, 3 advancers and 8 laggards were witnessed. Ecobank Ghana Ltd recorded the most gains with price appreciation of 21 pesewas to trade at GHS7.95 per share. Enterprise Group Ltd and Benso Oil Palm Plantation Ltd also saw 13 pesewas and a pesewa rise to end the trading week at GHS1.90 and GHS2.96 per share respectively.

On the flip side, Fan Milk Ltd had its share price declining by 59 pesewas to close at GHS4.50 per share. Standard Chartered Bank Ltd followed suite with 25 pesewas loss as it ended the week’s trade at GHS16.51 per share. Access Bank Ghana Ltd dropped by 13 pesewas to trade at GHS2.43 per share but Société Générale Ghana Ltd and CAL Bank Ltd both shed 3 pesewas each to close at 60 pesewas and 88 pesewas per share respectively. Total Petroleum Ltd and Guinness Ghana Breweries Ltd also shed 2 pesewas each to settle at GHS2.87 and GHS1.78 per share respectively. GCB Bank Ltd also joined the laggards after losing a pesewa to trade at GHS4.91 per share.

Currency Market

Source: Bank of Ghana 04.10.19

On the interbank currency market, the Ghana Cedi advanced against the US Dollar and the British pound but lost ground versus the Euro. The US dollar slipped as strings of downbeat economic data in the US affected demand. US. Nonfarm payrolls data revealed a job addition of 136,000 in September below the 145,000 jobs forecasted. Manufacturing activity index for September also came in lower at 52.6 points from the 56.4 points recorded in the month of August – the lowest in 10 years. These developments sparked fears of possible economic recession which affected the greenback. The US dollar thus posted a week-on week loss of 0.02 percent as it traded at GHS5.32 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 9.32 percent.

The British pound soared to a three-week high on the international commodities market on upbeat developments surrounding the Brexit negotiations. In the week under review, Boris Johnson’s government revised the Brexit deal with well-defined regulatory frameworks that seeks to cover all goods in the bid to replace the contentious Irish backstop arrangement. On the back of this, investors were very optimistic that a favourable trade deal could be achieved before the October 31 deadline. Despite the pound’s gains, it depreciated by 0.18 percent as it traded at GHS6.54 on the interbank currency market with the cedi riding on former’s fundamental weakness. The year-to-date depreciation of the cedi thus reduced to 5.56 percent. 

The Euro closed on a positive note on the international currency market in the week under review as investors upped their demand for the single currency following the dollar’s weakness. The euro was further lifted by rising investors bet for another round of monetary stimulus policy from the European Central Bank to revamp economic activities within the bloc. The Euro thus, recorded a week-on-week gain of 0.31 percent to sell at GHS5.84 on the interbank currency market. The year-to-date depreciation of the cedi thus eased to 5.57 percent.

International Markets

US equity market tumbled recording its third straight decline after disappointing manufacturing data sparked fears of economic recession in the US. The fear that the US economy could follow the likes of the UK and the Eurozone after the report indicated weakening trade conditions in the US sparked selling pressures. The S&P 500 index thus ended with a week-on-week decline of 0.33 percent to settle at 2,952.01 points.

The London Stock Exchange ended in the red after recording four consecutive losses in the week under review on account of Brexit worries and US imposition of tariff on some imported European goods. The FTSE 100 dropped by 3.65 percent to settle at 7,155.38 points.

The Japanese Stock Exchange headed southwards as political uncertainties emerging from the Asian region amid the global trade uncertainties affected stocks demand. The decision by Hong Kong leader to invoke a colonial-era emergency powers for the 1^st time in 50 years to address escalating violence raised investors uncertainties for the Japanese stocks. Nikkei 225 thus went down by 2.14 percent to settle at 21,410.20 percent.

Similar downtrends were also recorded on the African equity market with the Johannesburg All Share Index losing 2.20 percent to settle at 53,993.87 points. The Nigerian All Share Index also fell by 2.48 percent to settle at 26,987.45 points. The Nairobi All Share Index, however, upped by 2.05 percent to settle at 147.23 points.

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

Brent crude oil registered its biggest weekly decline in four months following signs of global economic recession and declining demand on the international commodities market. In addition to the recent streams of downbeat economic activities in Eurozone, UK and China, data emerging from the US economy on service activities, employment and wage data in the week under review worsened investors fear of global economic recession. Furthermore, the recent decision by the US to consider lifting the bans on oil production in Iran also contributed to the downward pricing of the oil commodity. Brent crude oil thus dropped by $3.54 to trade at $58.37 per barrel.

Gold ended the week’s trading session in the gains as investors sought out safe haven assets amid the economic and political turmoil across the developed economies. Gains in the yellow metal were however, trimmed following the rising expectation that the US Fed may not cut interest rate as expected in the month of November due to the recovery in interest rates on US bonds. Gold thus added $6.50 to close at $1,512.90 per ounce.

Cocoa closed bullish lifted by plans by top growers – Ivory Coast and Ghana to limit supply of the beans on the international commodities market. The decision by the Ivory Coast to set a cap of 2.0 million tonnes production to drive up the prices while also protecting the livelihood of farmers stimulated its demand. Cocoa added $33.00 to trade at $2,475.00 per metric tonne.

Coffee recorded a marginal decline on the international commodities market despite production contraction in Vietnam and Brazil. The decline of the soft crop is attributed to the depreciation of the Brazilian currency on the international forex market. Coffee shed 2 cents to close at 99 cents per pound.