Economy still fragile -Merban Stockbrokers
The domestic economy struggled for direction during the month of April as the sliding local currency, rising inflation and interest rates, high government expenditure and other challenges continued to weigh on consumer and business sentiments.
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The continuous fall of the Cedi has led to a climb in the prices of a number of goods and services in recent months.
With the nation’s reserves stretched, the Central Bank tried to save the situation by implementing some policies to ensure compliance with the country’s forex regulations.
Though the Cedi’s volatility has reduced in recent weeks, some stakeholders claim that the measures are inimical to businesses and the local economy.
Costs of goods and services worsened during the month as ripple effects of the Cedi’s fall and upward review of fuel and utility tariffs led to inflation rising from 14.5 per cent in March to 14.7 per cent at the end of April.
The Monetary Policy Committee (MPC) of the Bank of Ghana, however, kept its policy rate at 18 per cent as it believed that the impulses from the policy hike in February are still working through the system.
In other developments, there were heated discussions on Ghana signing onto the Economic Partnership Agreement (EPA) during the month.
Civil society organisations (CSOs)' trade unions and other stakeholders have protested against Ghana penning the agreement as they opined that the country’s struggling manufacturing sector would be disadvantaged.
Additionally, the possible loss of revenue by the government as EU products will enjoy 75 per cent tariff-free and quota-free preferential market access in return for granting Ghana’s exports 100 per cent tariff-free and quota-free market access has been kicked against by the protagonists.
Stock market
It was, at best, bearish in April with the market recording a second successive dip as decliners weighed heavily on the indices.
Investor concerns about the economy and profit taking were the major impacting factors during the month under review.
Though a number of companies released resilient quarter-one results, it failed to give the bourse a lift with the market recording its biggest monthly slide in four years.
Advancers fail to lift indices
Four equities edged higher at the end of the month but the benchmark Composite Index (GCI) could not bounce back from March’s reverse as declines in 17 equities combined to offset the effect of the advancers.
The GCI, as a result, shaved 131.07 points to close the month at 2,255.27 points. This saw the return on the broader market closing April at 5.13 per cent.
The benchmark’s performance this month was worse than the previous month’s dip of 34.57 points. It also fell short of the 67.19 points bagged in April 2013.
The GSE Financial Index (GFI) also lost ground, shedding 180.44 points to 1,912.02 points.
This return of the GFI, as a result, dropped to 7.02 per cent from 17.12 per cent at the end of March.
The GFI’s outturn this month was unimpressive when compared to a gain of 46.36 points in April 2013.
GOIL tops advancers
Ghana Oil (GOIL) was the lead gainer this month; bagging 8GHp to close at 89GHp. Fan Milk followed; edging up by 7GHp to GH¢7.52.
HFC Bank climbed 5GHp to close at GH¢1.25, while Total Petroleum completed the list by adding 2GHp to close the month at GH¢6.50.
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17 Equities head southward
On the other hand, 17 equities closed the month on the back foot with profit taking and bargain hunting as some of the impacting factors.
Societe Generale, SIC Insurance, Ecobank Ghana and Standard Chartered, which rallied during the first two months of the year, were under selling pressure. As a result, they shed 32GHp, 12GHp, GH¢1.15 and GH¢1.0 to close at 68GHp, 40GHp, GH¢6 and GH18.97 respectively.
PZ Cussons, Enterprise Group and CAL Bank, which made impressive gains in 2013 lost ground as profit taking by investors saw their share prices drop 3GHp, 10GHp and 12GHp to close April at 60GHp, GH¢2.29 and 86GHp respectively.
In the same vein, BOPP, GGBL and GCB also trimmed 60GHp, 12GHp and 8GHp to close at GH¢2.50, GH¢5.78 and GH¢4.01 respectively.
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Other decliners were Unilever, Tullow, UT Bank, Mechanical Lloyd, ETI, PBC and AYRTN.
Volumes, turnover improve
Though the market registered its biggest drop this month, volumes were impressive, with a number of block trades driving demand.
A total of 21.8 million shares changed hands in 21 equities.
Volumes registered this month compare favourably to the 10.1 million registered in March, and the 12.5 million shares recorded in February.
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It was also higher than the 16.9 million shares registered in April, 2013.
CAL Bank had the lion’s share of trades registered for the month.
A total of 11.37 million shares of CAL changed hands. This represented 52 per cent of the month’s total.
Other equities, which recorded impressive trade volumes, were Sam Woode (3.46 million) and UT Bank (1.63 million). Ghana Commercial Bank (1.33 million) and Societe Generale (1.14 million) were the other equities which also made up the list of the top-five most traded equities.
Turnover for the month was also impressive, driven largely by the higher volumes recorded.
Total value of trades for the month amounted to GH¢23.8 million.
This was 13.88 per cent above the GH¢20.9 million registered in March.
It was, however, 41.51 per cent below the GH¢40.69 million registered in April 2013.
CAL Bank recorded the highest turnover of GH¢9.82 million. GCB Bank followed with a turnover of GH¢5.4 million.
Fan Milk (GH¢2.96 million), Ecobank Ghana (GH¢1.06 million) and Standard Chartered (GH¢1.01 million) were the other equities which recorded impressive turnover.