Financial markets recorded mixed performances during the week under review, with strong investor appetite for government Treasury bills and continued gains on the Ghana Stock Exchange contrasting with renewed weakness in the Ghana cedi.
Demand at the primary Treasury bill auction strengthened significantly, while activity on the secondary fixed-income market also increased.
On the equities market, the Ghana Stock Exchange Composite Index extended its strong year-to-date performance, although trading volumes fell sharply.
The cedi, however, depreciated against all three major international currencies, adding to its year-to-date losses against the US dollar, pound sterling and euro.
Fixed-income market
Investor demand for government Treasury bills increased substantially during the week, with bids rising to GH¢11.64 billion from GH¢10.51 billion recorded at the previous auction.
The government had targeted GH¢6.217 billion but received total bids of GH¢11.64 billion, representing an 87.18% oversubscription.
The strong demand was reflected across the three Treasury bill tenors, although the proportion of bids accepted varied considerably.
The government accepted 63.82% of bids for the 91-day Treasury bill, 62.38% of those submitted for the 182-day bill and 97.34% of bids for the 364-day instrument.
Yields on the shorter-dated instruments eased during the auction. The interest rate on the 91-day Treasury bill declined by 13 basis points to 5.63%, while the rate on the 182-day bill fell by 11 basis points to 7.53%.
In contrast, the yield on the 364-day Treasury bill edged up by one basis point to 12.99%.
For the next auction, the government is seeking to raise GH¢5.993 billion, slightly below the GH¢6.217 billion target set for the week under review.
Secondary fixed-income trading
Activity on the secondary fixed-income market also picked up during the week, with trading volumes on the Ghana Fixed Income Market (GFIM) increasing by 32.6% to GH¢9.01 billion.
Domestic Debt Exchange Programme (DDEP) bonds remained the dominant instruments traded, accounting for 62.92% of total market activity.
Treasury bills followed with a 35.05 per cent share of trading volumes, while sell-buy-back transactions accounted for 1.97%.
Corporate bonds contributed 0.05% of total trading activity, with new Government of Ghana notes accounting for the remaining 0.01%.
The composition of trading activity therefore continued to point to the importance of restructured government securities in Ghana’s secondary fixed-income market.
Cedi comes under pressure
The currency market moved in the opposite direction, with the Ghana cedi losing ground against all three major currencies during the review period.
Against the US dollar, the cedi depreciated by 0.61% to close at GH¢11.76 to the dollar, taking its year-to-date depreciation to 11.15% based on Bank of Ghana interbank mid-rates.
The cedi’s weakness was more pronounced against the pound sterling, depreciating by 0.86% to GH¢15.88.
This brought its year-to-date depreciation against the pound to 12.46%.
Against the euro, the cedi declined by 1.03% to close at GH¢13.60, with its year-to-date depreciation against the European currency standing at 9.77%.
Indicative open-market rates were slightly different, with the cedi closing at mid-rates of GH¢11.75 to the US dollar, GH¢15.80 to the pound and GH¢13.51 to the euro.
The week’s depreciation across all three major currencies highlights continued pressure on the local currency despite the relatively strong performance of other segments of the financial market.
Stocks extend strong gains
The equities market, meanwhile, maintained its strong upward trajectory.
The Ghana Stock Exchange Composite Index closed the week at 15,187.47 points, representing a year-to-date return of 73.17%.
The week’s gains were driven largely by increases in selected stocks, particularly HORDS, DASPHARMA, ZEN, SCB Preference Shares, CPC and CLYD.
HORDS emerged as the strongest gainer of the week, rising 41.03% to GH¢0.55. Its year-to-date gain stood at an exceptional 450%.
DASPHARMA advanced 18.18% to GH¢0.52, bringing its year-to-date gain to 36.84%.
ZEN gained 10% to close at GH¢11.00, with its year-to-date return reaching 120%.
SCB Preference Shares also rose by 10% to GH¢0.99, while CPC gained 5.88% to close at GH¢0.18. CPC’s year-to-date return consequently stood at 260%.
Despite the broader market’s strong performance, several equities recorded marginal declines.
ACCESS fell by 0.03% to GH¢31.89, although it remained up 96.85% for the year.
EGL declined by 0.10% to GH¢10.03, with a year-to-date gain of 188.22%.
GCB slipped 0.23% to GH¢43.10, while GGBL fell 0.25% to GH¢11.88.
TOTAL recorded the largest decline among the listed stocks highlighted, easing 0.28% to GH¢39.83.
It was also the only one among the five decliners with a negative year-to-date return, at -1.17%.
Trading activity falls sharply
The strong movement in the Composite Index was not matched by trading activity.
Total shares traded during the week fell by 56.53%, from 29.73 million shares to 12.92 million shares.
Despite the sharp decline in volume, the total value of shares traded stood at approximately GH¢58.20 million.
The divergence between the index’s strong return and lower trading volumes suggests that gains were concentrated in selected counters rather than reflecting a broad-based surge in market participation.
Looking ahead, financial stocks and companies in the information and communications technology sector are expected to remain important drivers of the Composite Index’s performance in the coming week.
Overall, the week’s market performance presented a mixed picture: government securities attracted stronger demand, secondary fixed-income trading accelerated and equities continued their impressive year-to-date rally, while the cedi remained under pressure against major international currencies.
