• Yield on 91-Day T-Bill now at 14.70 percent, upped by 2 bps.
• GSE whipsawed previous week’s gains. 
• Ghana cedi depreciated against all three major trading currencies.
• Gold tumbled as global sentiment picks up.  

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 last Friday’s auction, the yield on the 91-Day T-Bill was quoted at 14.70 percent, representing 2 basis point increment. Yield on the 182-Day T-Bill however, dropped by 2 basis points to settle at 15.12 percent whiles that on the 364-Day T-Bill was at 17.91 percent, representing a basis point decline. The yield on the other treasury instruments however, remained the same as they were not scheduled for the week’s auction on the primary market.

At the closing bell, an amount of GHS1,024.30 million was raised by the Government of Ghana after accepting all bids tendered by investors. The accepted bids far exceeded the GHS966.00 million scheduled to be raised in the week’s auction as Government’s appetite for funds continue to soar. The 91-Day T-Bill continued to dominate the purchases of Government, constituting about 85.31 percent of the overall accepted bid. An amount of GHS723.00 is expected to be raised by the Government in the upcoming auction. 

 As largely expected, the normality of the yield curve was sustained in the week under review despite the marginal rate adjustment recorded on some of the treasury securities. The general positive economic outlook of the country despite uncertainties within the financial sector reforms is the major contributor to the sustenance of the yield curve. Policy directions by the central bank to keep securities with longer term maturities more appealing to the short-dated counterparts and the supply & demand nexus amidst the relative attractiveness of the money market to other markets are some other factors responsible for the normality of the yield curve. Following the long sustenance of the normality of the yield curve amidst other positive economic indicators it is imperative that upcoming monetary policy reviews consider a rate cut to deepen private sector participation in the domestic economy.

Ghana Stock Exchange

The equity market whipsawed previous week’s gains as low investor confidence stemming from the ripple effects of the Banking sector clean-up sparked selling pressure on the bourse. At the closing of the week’s trading, the GSE Composite Index sank by 2.05 percent to settle at an index level of 2,256.51 points, representing a year-to-date loss of 12.27 percent. The GSE Financial Stocks Index also dipped by 2.21 percent to end the week at 1,955.63 points, corresponding to a year-to-date loss of 9.20 percent.

Market outturns was significantly lower than recorded in the previous trading week, this follows the successful disposal of the shares of IFC in ETI last week. Total traded volume for the week stood at 15.03 million shares valued at GHS11.19 million, representing about 99.5 percent declines. MTN Ghana Ltd led the activity chart as it accounted for 96.24 percent of the overall traded volume. Market capitalization also declined by 1.13 percent to GHS56,948.17 million.

Stock Price Movements

In all, seven equities recorded price changes comprising a gainer and six laggards. Total Petroleum Ltd, the lone advancer, added 5 pesewas to trade at GHS3.05 per share.

Access Bank (Ghana) Ltd. occupied the bottom of the laggard’s list, trimming 44 pesewas of its week opening price to close at GHS2.55 per share. Ecobank Ghana Ltd. and CAL Bank Ltd. declined by 11 pesewas and 9 pesewas to settle at GHS8.14 and 90 pesewas per share respectively. Fan Milk Ltd. and MTN Ghana Ltd. also slipped by 2 pesewas each to trade at GHS5.47 and 70 pesewas per share respectively. Ecobank Ghana Ltd. also dropped by a pesewa to trade at 10 pesewas per share.

Currency Market

Source: Bank of Ghana 06.09.19

The Ghana cedi lost its footing against all the three major trading currencies on the interbank currency market. The US dollar posted its biggest week-on-week decline in a month on the international currency market following rising possibilities of the US Fed trimming interest rate for the second time. Strong economic data amidst easing global political tension sparked speculation of an interest rate cut by the Fed. Report showing recovery in economic activities coupled with positive outlook at the labour market which added 158,000 jobs in August strengthened the greenback. Despite the dollar’s weakness on the international currency market, it advanced by 0.41 percent against the local currency as it traded at GHS5.31. The year-to-date depreciation of the cedi thus rose to 9.11 percent.  

The British pound rebounded to a five-week high after the week’s trade on the international currency market. This followed the successful passage of a bill by UK’s opposition party refraining Boris Johnson from leaving the EU without a favorable trade deal. The move which is expected to also result in an imminent election to vote against Boris Johnson was overwhelmingly endorsed by investors as a “no-deal Brexit” could adversely affect the UK’s economy. The British pound thus recorded 1.56 percent week-on-week gain versus the cedi as it sold at GHS6.53 last Friday on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 5.51 percent.

The Euro posted a decline as strings of downbeat economic data by member countries dimmed the appeal for the single currency to investors. Purchasing Manager Index from the bloc and some member countries were far lower than expected. Germany’s Construction PMI recorded its the steepest contraction in 5-year following a general decline in activities at the civil engineering, commercial activity and new orders. The index fell to 46.3 points in August 2019 from 49.5 points recorded in July 2019. Eurozone’s third largest economy – Italy similarly recorded significant declines in its contraction activities falling rom 49.8 points in July to 48.1 points in August. The decline is said to be the fastest fall since March 2018. Despite the euro weakening on account of these daunting economic outlook in the Eurozone, it ended the trading week much stronger than the local currency with a week-on-week appreciation of 0.87 percent as it traded at GHS5.86. The year-to-date depreciation of the cedi thus stood at 5.93 percent.

International Markets

The US equity market rose further after the week’s trading activities as upbeat data from US labour market and other signs of economic recovery in the US amidst the high potential of the US Fed to cut interest rate for the second time contributed to the positive closure of the market. Stocks within the Telecoms, Consumer Goods and Oil & Gas were the gainers on the bourse. The S&P 500 thus ended with 1.79 percent rise to settle at 2,978.71 points. The Dow Jones Industrial Average also recorded a week-on-week rise of 1.49 percent to settle at 26,797.46 points.

The London Stock Market closed on a positive note despite incessant political turmoil surrounding the Brexit. The positive closure of the market was buoyed by improving sentiment on the international market following efforts by the US and China to resolve their prolonged trade war. The FTSE 100 thus ended with a week-on-week rise of 1.04 percent to settle at an index level of 7,282.34 points.

The Japanese Stock Exchange rebounded following the positive sentiments surrounding the trade truce between the US and China which drove risk taking among investors. Stocks within the Paper & Pulp, Railway & Bus and Real Estates were the top gainers on the bourse. The Nikkei 225 rose by 2.39 percent to settle at 21,199.57 points.

On the African equity market, the Johannesburg All Share Index ended with week-on-week gain of 0.60 percent to settle at 55,591.09 points. The Nigerian All Share Index, however, dropped by 1.38 percent to settle at 27,146.57 points. The Nairobi All Share Index also declined by 5.06 percent to settle at index point of 142.52.

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

On the international commodities market, Brent crude oil recorded gains following data suggesting rising demand of the energy commodity in the world’s second largest economy. Data released by the Energy Information Administration (EIA) in the trading week suggested a supply cut onto the international commodities market following the 4.8 million barrels cut in production in the US in the week ended 30^th August 2019. Data suggesting a rebound in activities in China’s Services sector driven by new orders also contributed to the positive closure of the commodity. Brent crude oil thus gained $1.11 to trade at $61.54 per barrel.

Gold retreated on the international commodities market as strong economic data from the US and the hope of trade war de-escalation between the US and China lowered the demand for the yellow metal. The expectation-beating labour market data recorded in the US and the advancement in plans to resolve the global trade war lowered the value of the yellow metal by $13.90 to trade at $1,515.50 per ounce.

Cocoa recorded another round of gains on the international commodities market as the lower-than-expected rainfall in top grower – Ivory Coast which is likely to affect the October-March crop season sparked speculative trading. Cocoa thus added $60.50 to trade at $2,274.00 per metric tonne.

Coffee finished the trading week on a positive note despite robust production expectation in top growers – Vietnam and Brazil. The positive closure of the soft crop was mainly due to the strong recovery of the Brazilian real in the week under review. Coffee thus added 3 cents to trade at 97 cents per pound.