• Yields on the GoG treasury securities witnessed mixed adjustment.
• Accra Bourse failed to sustain previous week's gain, weighed by six laggards.
• Ghana cedi advanced against all the three major trading currencies.
• Brent crude oil upticked on global supply threat. 

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 auction, the yield on the 91-Day T-Bill dropped by a basis point from the previous week’s rate of 14.73 percent to settle at 14.72 percent. The yield on the 182-Day T-Bill however, remained unchanged at 15.17 percent but that on the 364-Day T-Bill upped by 3 basis points to settle at 17.90 percent. The yields on the treasury notes and bonds also remained unchanged at their respective rates.

Government raised GHS746.93 million in the week ended 26^th July 2019, after accepting all bids tendered. This fell slightly below the previous week’s value of GHS788.98 million and the GHS820.00 million targets scheduled to be raised for the week. Among the bids raised, Government recorded strong appetite for the 91-Day T-Bill which constituted 69.43 percent of the total bids raised. In the upcoming auction an amount of GHS699.00 million is expected to be raised from the issuance of both the 91-Day and 182-Day T-Bills.

The term structure of the Government of Ghana treasury securities sustained its upward trend, and this paints a positive picture of the domestic economy. On the back of this, the growing paradigm shift of investors’ preference towards the risk-free instruments due to the long bearishness of the stock market, we foresee the sustenance of the yield curve with further cut in interest rates.

Ghana Stock Exchange

The Ghana Stock Market reversed last week’s gains driven by the heavy selloffs recorded in Ghana’s telecommunication giant – MTN Ghana Ltd. At the close of the week’s trading the GSE Composite Index recorded a week-on-week decline of 76 basis points to settle at an index level of 2,335.23 points, representing a year-to-date loss of 9.21 percent. The GSE Financial Stocks Index however posted a week-on-week gain of 100 basis points to close at 2,068.33 points, corresponding to a negative year-to-date return of 3.97 percent. This was primary as a result of the trickling in of bullish earnings by some stocks.  We anticipate some positive closures in the coming weeks supported by other upbeat earnings reports of listed firms.

Market turnover dropped significantly from the previous outturn. Total traded shares stood at 1.47 million valued at GHS1.47 million, representing 48.60 percent declines from the previous week’s volume. MTN Ghana Ltd had the lion share of the traded shares as it contributed 91.63 percent to the overall traded volume. Market capitalization declined by 0.31 percent to settle at GHS58,121.65 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, nine equities changed prices. Ecobank Ghana Ltd upped by 50 pesewas to trade at GHS8.50 per share. Fan Milk Ltd advanced by 7 pesewas to trade at GHS4.55 per share. Société General Ghana Ltd also upped by a pesewa to trade at 73 pesewas per share.

On the flip side, Total Petroleum Ltd dropped by 60 pesewas to trade at GHS3.40 per share. Access Bank Ghana Ltd followed suite with 34 pesewas decline to trade at GHS3.00 per share. Gunnies Ghana Breweries Ltd and Ghana Oil Company Ltd also trimmed 16 pesewas and 15 pesewas of their opening prices to close at GHS2.00 and GHS2.05 per share respectively. MTN Ghana Ltd and Intravenous Infusion Ltd tumbled by a pesewa each to trade at 71 pesewas and 5 pesewas per share.

Currency Market

Source: Bank of Ghana 19.07.19

The interbank currency market ended the week’s trade with the Ghana cedi appreciating against all the three major trading currencies. In the week under review, the US dollar jumped to a two-months high supported by the finalization of a deal to lift Government borrowing limit to boost infrastructure and other related expenditures for the next two years in the US. Policy reviews by the International Monetary Fund to up growth forecast in the US by 0.3 percentage point to 2.6 percent but trimmed that for the global economy from 3.3 percent to 3.2 percent boosted demand for the greenback. These and investors expectation of interest rate cut following the high expectation of 1.8 percent expansion in U.S. GDP, compared with 3.1% in the first quarter also supported the dollar. The US dollar however, ended with a week-on-week decline of 0.01 percent to trade at GHS5.26 on the interbank currency market. The year-to-date depreciation of the cedi stood at 8.27 percent last Friday.

The British pound worsened its outlook on the international currency market following political uncertainties associated with Boris Johnson’s election as the successor to Theresa May. The dovish commentary by the European Union not to accept any deal which is not compatible with the Theresa May’s deal with the bloc sparked heavy sell-off of the pound. This followed the growing concerns that Boris is likely to adopt a “hard-Brexit” irrespective of having a deal or not with the European Union amidst associated negative impact on UK’s economy making investors sceptical. The British pound thus posted a week-on-week depreciation of 0.92 percent to trade at GHS6.51 on the interbank currency market. The year-to-date depreciation of the cedi thus lessened to 5.21 percent.

The Euro dimmed its shine weighed by downbeat economic data and failure of the European Central Bank to adhere to the interest rate cut signal during its recently held monetary policy review. The decision by the bank to keep its interest rate unchanged while hinting at more stimulus to address economic challenges in the bloc dimmed the single currency’s outlook. Data on bank lending and economic activities measured by the PMI also came disappointing.  Data from the European Central Bank showed corporate lending for Italy and Spain contracting by 1.3 percent and 1.7 percent respectively. Eurozone’s PMI eased by 0.7 points to settle at 51.5 in July from the 52.2 recorded in June, its lowest in 3 months. On the back of this, the Euro recorded a week on week decline of 0.87 percent to trade at GHS5.84. The year-to-date depreciation of the cedi decline to 5.68 percent.

International Markets

US equity market closed on a positive note supported by bullish earnings report by some listed stocks and investors drift for equities following the signal that interest rate will be less trimmed than earlier reported by the US Fed. Alphabet saw its revenue for the 2^nd quarter upped by 19 percent to $36.33 billion whiles that of Starbucks Ltd grew to $6.82 billion beating expectation of $6.67 billion. The S&P 500 thus posted a week-on-week gain of 1.65 percent to settle at 3,025.86 points. The Dow Jones Industrial Average also increased by 0.14 percent to settle at 27,192.45 points.

The London Stock Exchange finished the trading week high lifted by some positive earnings report by some listed companies and corporate actions by one of the largest fast food companies on the bourse. The decision by Just Eat Plc to buy financial data analytics provider Refinitiv Holdings Ltd for $27 billion, including debt pushed the bourse in the gains. The FTSE 100 thus rose by 0.54 percent to settle at 7,549.06 points.

The Japanese Stock Exchange witnessed a positive closure last week supported by expectation-beating earnings report by stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus advanced by 0.89 percent to settle at 21,658.15 points.

On the African equity market, the Nigerian All Share Index rose by 0.05 percent to settle at 27,933.31 points. The Johannesburg All Share Index on the flip side, dropped by 1.16 percent to settle at 57,570.54 points. The Nairobi All Share Index also declined by 0.55 percent to an index level of 149.00 points.

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

Brent crude oil closed the trading week on a positive note as tensions in the middle east disrupted supply of the energy commodity onto the global commodities market. Data suggesting a drop-in oil production in the world’s largest economy by 10.8 million in the week ended 19^th July 2019 created shortages on the commodities market to result in upward pricing of the commodities. Brent crude oil thus rose by $1.30 to trade at $63.77 per barrel.

Gold was priced lower during the week’s trading activities following the decision by the European Central Bank to leave its policy rate unchanged which dimmed demand for the safe haven asset. The expectation of US GDP hitting 1.8 percent for the second quarter contributed to further declines of the yellow metal as this could affect the urgency to cut interest rate in the US. Gold thus dropped by $10.05 to trade at $1,416.25 per ounce

Cocoa tumbled on the international commodities market on concerns of the quality and size of the main-crop for the October-March season following below-average rainfall recorded in major growing areas of Ivory Coast.  Cocoa thus declined by $45.00 to trade at $2,422.00 per metric tonne.

Coffee slipped on account of proposed imposition of tariffs and remittance fees by the US government on exports of one of the leading producers – Guatemala following disputes on illegal migrants. Coffee thus shed 7 cents to trade at $1.00 per pound.