GSE ends August 2020 on a bearish note

The Ghana Stock Exchange ended the last week of August bearish on account of selling pressure in some consumer staple stocks– Fan Milk Ltd and Unilever Ghana Ltd. This was spurred by the daunting outlook of their 2020-half-year earnings report.

Fan Milk Ghana Ltd. had its net-profit-after-tax trimmed by 93.35 percent from the GH¢10.57 million recorded in June 2019 to GH¢703,000 in June 2020. This significantly lowered its earnings per share from 9 pesewas in June 2019 to a pesewa in June 2020.

Unilever Ghana Ltd, on the other hand, worsened its outlook as it posted a negative profit-after-tax of GH¢16.84 million from a positive profit-after-tax of GH¢17.09 million.

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On the back of this, the GSE Composite Index thus eased by 38 basis points to settle at an index level of 1,840.07 points, representing a year-to-date loss of 18.48 per cent. The GSE Financial Stocks Index was, however, unchanged at 1,687.40 points, reflecting a year-to-date loss of 16.45 per cent.

Gse indices

The last week of August’s trade realized a total volume of 9.59 million stocks valued at GH¢7.64 million on the bourse. This represents over hundred percent increment over the previous week’s outturn in terms of volume of traded stocks.

Most traded stocks in terms of volume

MTN Ghana Ltd. led the activity chart with 51.18 percent share of the overall traded volume. Market capitalization also went down by 0.21 percent to settle at GH¢52,464.48 million on 4th September 2020.

GSE MARKET INDICATORS

Stock Price Movements

stock price movement advancers

At the paring of the week (28th August –4th September 2020) under review’s opening and closing prices, 1 advancer and 2 laggards were recorded on the bourse. Cocoa Processing Company Ltd was the sole advancer, it gained 1 pesewa to trade at 3 pesewas.

losers weeks

Unilever Ghana Ltd recorded the worst decline in the week’s trade, losing GHS1.13 pesewas to trade at GHS10.21 per share. Fan Milk Ltd also went down by 19 pesewas to trade at GHS1.04 per share.

 Treasury securities

Treasury securities

The yield on the Government of Ghana Treasury Securities witnessed mixed adjustment at the week’s (28th August –4th September 2020) auction. Interest rate on the 91-Day T-Bill rate dropped by 4 basis points to settle at 14.02 percent. The yields on the 182-Day T-Bill rose by 3 basis points to 14.11 percent and that on the 364-Day T-Bill also increased by 8 basis points to settle at 16.91 percent.

The interest rates on the Government of Ghana’s Treasury Notes and Bonds were, however, unchanged as they were not part of the week’s auction.

results of auction 4th september 2020

Government raised a total of GH¢1,026.57 million from the issuance of the 91-Day, 182-Day, and 364-Day T-Bills in the week under review. The amount raised outstripped the previous week’s value of GH¢806.94 million but missed the week’s target of GH¢1,410.00 million.

The 91-Day T-Bill was the most accepted bid by the Government as it constituted 87.73 percent of the overall bids purchased. A target of GHS919.00 million was set for the next auction from the sale of the 91-Day and 182-Day T-Bills.

Yield

Currency market

currency market

The Ghana Cedi posted a recovery against the British Pound and the Euro but extended its loss versus the US Dollar. The US Dollar recorded its biggest weekly gain in two-and-half months on the international currency market after US Fed Vice Chair cleared the myth surrounding the newly adopted monetary policy that seeks to achieve an average inflation rate of 2 percent to balance impacts of super-low inflation; thereby ensuring economic recovery in the US.

The greenback’s lift was further supported by Fed’s hawkish commentary about the gradual pace of economic recovery from the pandemic as US Manufacturing sector expanded for the third straight month in August with the PMI rising by 1.8 points to 56 points. The US dollar thus ended with a weekly appreciation of 0.16 percent as it traded at GH¢5.6969 on the interbank currency. The year-to-date depreciation of the local currency thus rose to 2.82 percent.

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The British pound was on the defensive against major rivals on the international currency market on rekindled uncertainties surrounding the Brexit. The lack of progress to obtain a favourable deal from the European Union amidst the uncertainties in the chances of UK’s Government to secure the deal as the possibility dwindled to 30-40 percent significantly affected market sentiment. The British Pound thus, depreciated by 0.87 percent to reduce its selling price to GH¢7.52 on the interbank currency market. The year-to-date depreciation of the cedi reduced to 2.66 percent.

The Euro was knocked down by ill-sentiment surrounding the slow recovery of economic activities in the Eurozone. Eurozone’s consumer prices and unemployment data came in much disappointing than expected despite the easing of the COVID-19 restrictions. Eurozone unemployment rose further in July to 7.9 percent, representing 20 basis points increment over the previous month’s reading of 7.7 percent. Consumer prices also failed to sustain its recovery as it reversed the upward trend in August. The Index fell by 0.2 percent in August against the 0.4 percent rise recorded in July affecting the demand for the currency. The Euro thus posted a weekly depreciation of 0.80 percent to trade at GH¢6.72. The year-to-date depreciation of the cedi thus reduced to 7.48 percent.

Commodities

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Brent crude oil lowered its value on the international commodities market, posting its biggest weekly decline since June 2020 on lackluster demand on the global market. China– the world’ largest crude importer is expected to reduce its demand due to stockpile of the commodity amidst gradual opening of its refineries. Brent crude oil thus shed 91 cents to trade at US$44.14 per barrel.

Gold came under pressure in the week’s trade as investors shifted their safe haven focus from the yellow metal to the US dollar as they digested the newly adopted monetary policy of the US Fed. The plan to halt interest rate hike for years to achieve its average inflation target of 2 percent made the greenback a preferable safe haven for investors. Gold thus shed US$29.60 to trade at US$1,945.30 per ounce. 

Cocoa tumbled as favourable climatic conditions in Ivory Coast subdued the likely impact of the joint policy initiatives adopted by Ghana and Ivory Coast to regulate the market. Recent downpour with an average rainfall of 6.9 millimetres in Ivory Coast is expected to improve the October-March production output, hence, adversely affecting the value of the crop on the international market. Cocoa, thus, went down by US$51.50 to close at US$2,640.50 per metric tonne.

Coffee was lifted further by falling inventories and resurgence of the Brazilian Real in the week’s trade.  The continued reduction in the supply of beans from Brazil and Vietnam onto the international commodities market and the 0.72 percent appreciation of the Real supported the soft crop. Coffee added 8 cents to trade at US$1.35 per pound.    

-IGS Financial Services

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