Consumer sentiments subdued in August
Business and consumer sentiments remained low last month as key economic indicators continued to underperform during the month.
While the cedi failed to build on last month’s gains, inflation, Producer Price Index (PPI) and interest rates remained high.
The ripple effects of the upward review of fuel prices also raised inflationary pressures during the month with the year-on-year change in the average prices of goods and services hitting a four-year high of 15.9 per cent in the month under review.
In other developments, provisional fiscal data released by the Ministry of Finance and Economic Planning (MOFEP) showed that total revenue for the half year amounted to GH¢11.14 billion as against a target of GH¢12.1 billion.
Total expenditure for the six months also amounted to GH¢13.5 billion.
In a bid to boost business confidence, the Bank of Ghana reversed the foreign exchange polices it instituted in February.
The reversal led to the removal of the limit of US$1,000 on over-the-counter foreign exchange cash withdrawal and also allowed exporters to continue repatriating in full their export proceeds in accordance with the terms agreed between the trading parties.
Also, foreign currency loans by local banks to their domestic customers have been restored.
Stock market
The stock market was held back in the month under review as it failed to bounce back from the previous month’s slide.
Half year financial results released during the month could not whip up investors’ interest as the indices headed downwards on the back of fourteen laggards.
Activity was generally muted during the month of August as concerns about the economic environment continued to dampen investor appetite.
On the back of the aforesaid, the benchmark GSE Composite Index (GCI) lost 100.17 points to 2,200.2 points.
The GCI had shaved 73.03 points in July. Its return on the market thus slipped to 2.5 per cent from 7.23 per cent the previous month.
Volume declines
A total of 11.07 million shares changed hands in thirty equities.
This was 18 per cent lower than the 13.55 million shares exchanged during the previous month.
Volumes in August were also lower than figures registered for the same period in 2013.
Societe Generale (SOGEGH) was the most traded stock as it accounted for 42 per cent of trades registered for the month.
A total of 4.70 million shares of SOGEGH changed hands.
Other equities which recorded impressive trade volumes were CAL Bank (1.28 million), Ecobank Transnational Incorporated (1.20 million), Aluworks (963,620) and UTB (364,095); making up the list of the top-5 most traded equities.
Turnover slips
Total value of trades for the month on the back of the aforementioned fell to GH¢20.9 million from GH¢42.5 million in July.
It was, however, higher than the value recorded in August 2013.
The main drivers of this month’s turnover were Stanchart, which registered the highest turnover of GH¢5.40 million; Societe Generale (GH¢4.40 million) and Ecobank Ghana (GH¢2.0 million).
Money market
Short-term bills inched up marginally during the month, sending rates to their highest levels since the third quarter of 2009, when three-month borrowing costs peaked at almost 26 per cent.
The 91-Day bill climbed 23 basis points to 25.20 per cent at the end of August.
This compared to a leap of 88 basis points in July.
The 182-Day bill, which gained 507 basis points last month, only managed six basis points in August to 26.41 per cent.
The One-Year and the Two-Year Notes were flat, closing the month at 22.50 percent and 23.0 per cent respectively.
The Central Bank accrued a total of GH¢4.31 billion from both long and short-term securities; an increase on the GH¢4.15 billion recorded in July, and also higher than the total funds of GH¢2.42 billion received by the Bank of Ghana from investors for the same period in 2013.
Currency market
For August, the cedi lost ground against the major trading currencies as its volatility increased when compared to the previous month.
It closed the month down by 3.18 per cent against the dollar to GH¢3.13.
This compared to a depreciation of one per cent registered against the greenback in July.
The cedi also shaved 1.25 per cent against the pound to GH¢5.19. Against the euro, the Swiss franc and rand it trimmed 1.68 per cent, 2.58 per cent and 3.52 per cent to GH¢4.13, GH¢3.42 and GH¢0.29 respectively.
Comparatively, the cedi’s performance against the three currencies this month was not better than the outturn in July when it appreciated by 0.86 per cent, 0.99 per cent and 0.05 per cent respectively.
Outlook
The domestic economy is likely to receive some propping in the months ahead as government explores alternatives to contain the falling local currency, rising inflation, high interest rates and reduce its expenditure, among others.
The government’s request for IMF assistance to support its efforts to reduce economic imbalances may help give a lift to bruised business confidence.
The reversal of the foreign exchange rules by the BoG is likely to lift business confidence although the
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