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Ghana Stock Exchange’s Weak Performance Continues in 2020

Ghana Stock Exchange’s Weak Performance Continues in 2020

Trading on the Ghana Stock Exchange ended on a mixed note in May 2020, with the benchmark Composite Index heading further southwards on account of significant selling pressure by the telecommunication giant– MTN Ghana and some consumable stocks.

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The GSE Composite Index, thus, recorded a decline of 353 basis points to settle at 1,941.03 points, corresponding to a year-to-date loss of 14.01 percent.

The GSE Financial Stocks Index on the other hand, surged by 12 basis points in the month of trading despite ill-sentiment surrounding the dividend suspension which affected the index in other previous month’s trading. The index stood at 1,843.10 points, corresponding to a year-to-date loss of 8.74 percent.

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Market outturns, however, improved significantly in May, with a total of 35.40 million shares valued at GH¢21.11 million exchanging hands. MTN Ghana Ltd led the activity chart with 98.75 percent share of the overall traded volume. Market capitalization, however, dropped by 1.36 percent to GH¢53,542.60 million at end of the month’s trade.

The Ghana Stock Exchange has been on a downward trend for two consecutive years, with the Composite index declining by 0.29 percent and the financial index also declining by 6.79 percent in 2018.

The situation was the same in 2019, with the composite index declining by 12.25 percent and the financial index also declining by 6.23 percent.

In 2020, the Composite index has so far declined by 14.55 percent year to date, with the financial index also declining by 10.86 percent year to date.

 

Stock price movements

In the week ending May 29, seven equities altered their share prices, with Ecobank Ghana Ltd. emerging as the sole price advancer; it upped by 4 pesewas to trade at GH¢7.49 per share.

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On the flip side, NewGold led the pack of six losers; it dipped by GH¢3.20. Benso Oil Palm Plantation and MTN Ghana Ltd also eased by 15 pesewas and 6 pesewas to trade at GH¢2.50 and 55 pesewas per share, respectively. Fan Milk Ltd and Ghana Oil Company Ltd slipped by a pesewa each to settle at GH¢3.38 and GH¢1.58 per share, respectively. Total Petroleum Ghana Ltd also inched down by a pesewa to trade at GH¢2.49 per share.

 

Government of Ghana treasury securities

For the week, ending May 29, the yield on the 91-Day T-Bill moderated by 4 basis points to settle at 14.02 percent. That on the 182-Day and 364-Day T-Bills however inched up by 2 basis points and 18 basis points as they settled at 14.07 percent and 16.88 percent, respectively.

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The 3-year bond, which was issued to both domestic and foreign investors to finance government project and maturing bills, had its yields trimmed by 50 basis points to 18.85 percent.   Yields on other Government of Ghana’s Treasury Notes and Bonds were, however, unchanged.

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As largely anticipated, the term structure of Government of Ghana treasury securities sustained its normality. The commitment by the central bank in ensuring that yields on long-dated treasury securities are relatively attractive over their short-dated ones coupled with the safe-haven nature of the money market amidst continued investor confidence in the domestic economy are factors accounting for the normality of the yield curve. It is also anticipated that irrespective of the Government’s demand for funds to service maturing bills and also finance its developmental projects, yields on treasury securities will maintain their downtrend. 

 

Currency market

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On the interbank currency market, the Ghana cedi depreciated against all the three major trading currencies in May. The US dollar advanced on the international currency market as the heightened US-China trade tension rather increased the demand for the safe-haven currency despite disappoiInting consumer data. US Consumer spending for April declined by 13.6 percent; worse than the 6.9 percent dip recorded in March. The Dollar thus rode on this development as it posted a weekly gain of 0.09 to sell at GH¢5.62 per share. The year-to-date depreciation of the cedi thus increased to 1.54 percent.  

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The British Pound eased to a two-month low on account of post Brexit worries and speculations of a negative interest rate policy by the Bank of England. Lingering uncertainty over Britain's trading relationship with the EU-Post Brexit cast a dim outlook on the economy as both parties took an entrenched position. The Pound was further knocked down by the growing speculations that the Bank of England intends to adopt a negative interest rates to mitigate the adverse effect of the COVID-19 on UK’s economy. In spite of this, the Pound upped its selling price to GH¢6.92 as the cedi posted a week-on-week depreciation of 1.13 percent. The year-to-date appreciation of cedi thus narrowed to 5.74 percent.

The Euro appreciated on the international currency market on improved investors’ confidence on a recovery of the bloc. The European Union’s unveiling of a 750-billion-euro recovery-comprising 500 billion euros in grants and 250 billion euros in loans to support member states affected by the COVID-19 pandemic buoyed market sentiment in the trading week. The Euro thus traded at GH¢6.24 on the interbank currency market, representing a week-on-week gain of 2.02 percent. The year-to-date depreciation of the cedi thus increased to 0.48 percent.

 

Commodities

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Brent crude oil posted a marginal gain in May, despite a rekindled trade dispute between the US and China which affected market activities. The upsurge of the energy commodity was driven by the uptick in global demand which resulted in a significant rise in the exportation of crude oil worldwide. Brent crude oil thus added 10 cents to trade at US$35.23 per barrel.

Gold closed the trading month lower despite a strong rebound associated with the heightened trade tension and downbeat unemployment data from the US. The negative closure of the yellow metal stemmed from the general upbeat sentiment which characterized the global market following the reopening of some economies which stimulated risk taking activities to dim the appeal for the yellow metal. Gold thus shed US$9.40 to trade at US$1,726.10 per ounce.

Cocoa surged on the international commodities market as the unfavorable climatic conditions inhibiting production in top grower – Ivory Coast contributed to the upward review of its pricing. Ivory Coast recorded lower volumes of rainfall than required to support cocoa production as the current rainfall of 23.8 millimeters (mm) fell significantly below the 5-year average of 43.3 millimeters (mm). Cocoa thus gained US$36.50 to trade at US$2,430.50 per metric tonne.

Coffee dropped to its lowest in three-and-half months on account of bumper harvest in Brazil and the weakening of the Brazilian real against major international currencies. Coffee traded below the US$1.00 benchmark after losing 4 pesewas to sell at 99.92 cents per pound.

Source IGS Financial Services Limited

2018 market commentary; Turmoil in the banking sector weighed heavily on the markets

2018 market commentary; Turmoil in the banking sector weighed heavily on the markets

At the end of January 2018, Bloomberg reported that the Ghana Stock Exchange Composite Index (GSE-CI) gained 19

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  • Thirty-four new cases of coronavirus have been reported in Nigeria, bringing the total number of confirmed infections in the country to 407.
  • The Nigeria Centre for Disease Control announced this on its Twitter handle on Wednesday.

 

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