Equity market maintains upward trajectory
The Accra Bourse sustained its upward trajectory last week on account of uptick in investor confidence, with bargain hunters demanding valuable stocks.
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The GSE-Composite Index thus edged up by 1.36 per cent to 1,759.27 points, which corresponded into a year-to-date gain of 4.16 per cent. The GSE-Financial Stock Index also appreciated by 1.91 per cent to 1,644.07 points, improving its year-to-date gain to 6.38 per cent.
Yields on Government of Ghana treasury securities eased further in the week under review. Last week’s auction results showed 1.62 per cent and 2.04 per cent down trends of the 91-Day and 182-Day T-Bills respectively. The 91-Day and 182-Day T-Bills are currently yielding 15.80 per cent and 16.83 per cent respectively. Yields on other securities, however, stood same.
Government accepted GH¢1.29 worth of bids, leaving only GH¢1 million worth of bids unaccepted. Despite the high level of acceptance, the week’s target of GH¢1.30 billion was unattained. The next auction slated for the 27th of January 2017, is expected to raise a total of GH¢1.25 billion worth of the 91-day and 182-day treasury securities.
The moderation in the rates of the short-dated securities sustained the recent regular pattern of the yield curve of Government’s securities for last week.
Cedi performance
The local currency depreciated against its major trading currencies last week. Improved inflation outlook of 1.1 per cent in the Eurozone coupled with a 0.4 per cent growth in construction output and a one per cent rise in producer price in Germany enhanced the economic outlook of the 19-bloc nation. This supported the value of the euro against the cedi. The local currency thus depreciated by 0.45 per cent week-on-week to end last week’s trading at GH¢4.52 to the euro. Year-to-date depreciation of the cedi stood at 1.93 per cent against the Eurozone’s shared currency.
The cedi succumbed to 1.82 per cent weekly loss against the pound, in spite of the local currency appreciating against the pound in most trading sessions of the week. The pound bounced back versus the cedi as positive comments by UK’s Prime Minister alleviated fears of uncertainties that surrounded the Brexit. The cedi traded at GH¢5.22 per pound with a year to date depreciation of 0.43 per cent.
World Bank’s upward revision of growth outlook for the United States of America to 2.3 per cent for 2017 and 2.5 per cent in 2018 buoyed investors sentiment and subsequently offered support to the dollar. The greenback thus appreciated by 0.24 per cent against the cedi to extend its year-to-date depreciation to 0.89 per cent. The cedi ended the week, trading at mid-rate of GH¢4.24 per the dollar.
Commodities market
Brent crude advanced by 0.07 per cent last week despite news of rising stockpile of crude inventories in the U.S. The slow but tightening policy by OPEC vis-à-vis the rising demand for oil supported the black gold as it rose to trade at US$55.49 per barrel. The gains in the commodity was also sustained by the reports of growth in the Chinese economy, which did show signs of healthy demand for oil in the coming days.
Gold traded high as weak sentiment on the U.S. dollar amid sustained uncertainty over the new U.S. administration’s fiscal and economic policies sharped the outlook of the yellow metal. The precious metal ended the week, gaining 0.75 per cent to trade at US$1,204.30 per ounce.
Recent reports of adverse climatic conditions emanating from inadequate rainfall coupled with Harmattan winds affected the quality of cocoa in top-grower countries. This lowered the price of the soft-crop, closing the week at US$2,140.00 per metric tonne.
Coffee sustained its upward rally following signs of output declines due to the prolonged drought in Brazil and Vietnam, which caused farmers to undertake "drastic" pruning and trees uprooting. The soft crop traded at US$1.532 per pound after gaining 2.61 per cent on the back of increased demand in the U.S. — IGS-FSL/GB