Investor appetite for Ghana’s financial assets strengthened significantly last week as the government recorded a sharp oversubscription in the Treasury bill market, even as the Ghana cedi weakened against the major trading currencies and activity on the Ghana Stock Exchange remained largely positive.
Data from the Ghana Fixed Income Market (GFIM) showed that demand for short-term government securities surged strongly, reflecting growing investor confidence in the domestic debt market and the broader macroeconomic recovery.
At the same time, equities continued their bullish momentum with the benchmark GSE Composite Index extending its impressive year-to-date gains to over 66%.
However, despite the strong performance across the fixed income and equities markets, the local currency came under renewed pressure, depreciating against the United States dollar, British pound and euro.
Treasury bill demand surges
At the primary auction, investor demand for Treasury bills rose sharply from GH¢4.49 billion in the previous week to GH¢7.83 billion in the latest auction.
The government had targeted GH¢4.35 billion but received bids worth GH¢7.83 billion, representing an oversubscription rate of 80.04%.
The strong demand signals continued investor confidence in government securities despite declining yields on some tenors.
The auction results showed that the government accepted 76.53% of bids tendered for the 91-day Treasury bill, 87.78% for the 182-day bill and 78.01% for the 364-day bill.
Interest rates were mixed across the tenors. The yield on the 91-day Treasury bill declined by four basis points to 4.88%, while the 364-day bill fell by seven basis points to 10.13%.
In contrast, the 182-day bill recorded a slight increase of seven basis points to 7.04%.
Analysts say the strong oversubscription reflects sustained liquidity within the financial system as investors continue to favour relatively safer government instruments amid ongoing economic adjustments following the Domestic Debt Exchange Programme (DDEP).
Government is seeking to raise another GH¢4.30 billion in the next Treasury bill auction.
Secondary market activity slows
While the primary market recorded strong investor participation, trading activity on the secondary market weakened during the review period.
Trading volumes on the Ghana Fixed Income Market declined by 25.4% week-on-week to GH¢5.04 billion.
Treasury bills remained the dominant instruments traded on the market, accounting for 44.17% of total transactions.
Sell-Buy Back transactions constituted 30.82% of total trades, while DDEP bonds accounted for 22.05%.
New Government of Ghana notes contributed 2.79% of total activity, corporate bonds represented 0.16% and old Government of Ghana notes made up just 0.01%.
The decline in secondary market activity comes after several weeks of elevated trading volumes, suggesting some moderation in market repositioning by institutional investors.
Cedi weakens against major currencies
On the foreign exchange market, the Ghana cedi recorded losses against all three major trading currencies.
According to Bank of Ghana interbank midrates, the cedi depreciated by 0.75% against the United States dollar to close at GH¢11.28 to the dollar.
This pushed the currency’s year-to-date depreciation against the dollar to 7.32%.
Against the British pound, the cedi weakened by 1.07% to close at GH¢15.36, translating into a year-to-date depreciation of 8.50%.
The local currency also lost 1.12% against the euro to settle at GH¢13.28, bringing its cumulative depreciation against the euro this year to 7.57%.
Indicative rates on the open market showed the cedi closing at GH¢11.44 to the dollar, GH¢15.50 to the pound and GH¢13.44 to the euro.
Market analysts attributed the renewed depreciation pressures partly to increased demand for foreign exchange from importers and corporate institutions, although the cedi has remained relatively stable compared to the severe volatility experienced in previous years.
Stock market extends rally
Meanwhile, the Ghana Stock Exchange continued its remarkable bullish run, with the benchmark GSE Composite Index closing the week at 14,567.57 points.
This represented a year-to-date return of 66.10%, maintaining Ghana’s stock market among the best-performing exchanges globally this year.
The rally was largely driven by gains in the share prices of Fan Milk PLC (FML), Zenith Bank Ghana (ZEN), TotalEnergies Marketing Ghana (TOTAL), SIC Insurance Company (SIC), Clydestone Ghana (CLYD), Société Générale Ghana (SOGEGH) and GOIL PLC.
Among the top gainers, Fan Milk recorded the highest increase, rising by 12.13% to close at GH¢13.93, extending its year-to-date gain to 74.13%.
Zenith Bank Ghana climbed 19.87% to GH¢7.36, with its year-to-date return reaching 47.20%.
TOTAL appreciated by 6.60% to GH¢36.49 despite maintaining a negative year-to-date return of 9.45%.
SIC Insurance gained 6.37% to close at GH¢6.01, pushing its year-to-date gain to an impressive 400.83%.
Clydestone Ghana also rose by 2.50% to GH¢1.64, with its cumulative return this year reaching 256.52%.
Some equities, however, recorded declines during the week.
Enterprise Group (EGH) shed 0.04% to close at GH¢48.85, although the stock still maintains a year-to-date gain of 95.40%.
Guinness Ghana Breweries PLC (GGBL) fell by 0.20% to GH¢14.96 while Republic Bank Ghana (RBGH) dropped by 0.72% to GH¢5.53.
Enterprise Life Assurance (EGL) declined by 3.54% to GH¢10.64 while GCB Bank lost 3.73% to close at GH¢40.00.
Despite the mixed performance among some counters, overall market activity remained strong.
Trading volumes on the exchange increased by 2.24% from 11.51 million shares to 11.76 million shares.
The total value traded during the week stood at approximately GH¢66.21 million.
Financial and ICT stocks lead outlook
Market analysts expect financial stocks and companies within the information and communication technology sector to continue driving the performance of the stock market in the coming weeks.
The positive outlook is supported by improving macroeconomic conditions, easing inflationary pressures and growing investor confidence following Ghana’s ongoing fiscal consolidation efforts.
The strong Treasury bill auction performance, combined with the sustained rally on the stock market, also reflects improving sentiment among both institutional and retail investors as the economy continues its gradual recovery path.
However, analysts caution that external pressures, including global commodity price movements and foreign exchange demand, could continue to influence currency stability and investor behaviour in the near term.
