T-bill rates edge up as govt misses deficit target

Treasury bill rates recorded marginal hikes at the last auction on the back of reports that the government had missed its deficit target for 2016 fiscal year.The yield on the 91-Day T-Bill settled at 15.95 after gaining 15bps.

The 182-Day also added 14bps to close at 16.97 percent.

 The 1-Year fixed note, however, shed 50bps to trade at 19.00 per cent. Rates on all other securities remained unchanged. 

In spite of revising its deficit target to 5.3 per cent in July, last year, recent reports from the Ministry of Finance showed that the deficit widened to 10 per cent after revenue failed to meet target. This was in spite of the fact that expenditures were broadly satisfactory.

In its weekly market report, IGS Financial Services Limited said a total of GH¢1.18 billion worth of bids were tendered in the week’s auction by investors.

The government, however, accepted GH¢1.14 billion worth of bids out of the GH¢1.16 billion targeted for the week.

At next week’s auctions, the government expects to raise GH¢1.01 billion for the 91-Day and 182-Day T-Bills and GH¢420.14 million for the five-Year Treasury Bond. 

Owning to the significant trimming in the yield of the five-Year Bond in the week’s auction, the recent regular pattern of the yield curve was unachievable.

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Therefore, to return the pattern to a regular one, yields on other treasuries need to be significantly trimmed in the coming months.

Stock market

The equity market sustained its bullish trend, as increased investor confidence arising from end of year-earnings growth of some listed companies propped up the performance of the stock market.

The GSE-Composite Index recorded a year-to-date performance of 8.08 per cent after climbing 3.26 per cent to close at 1,825.59  points.

The GSE-Financial Stock Index also went up by 4.31 per cent to 1,725.12 points, raising its year-to-date performance to 11.63 per cent.  

The market recorded a marginal decrease in the volume of shares traded at the close of the week under review.

Total traded volume stood at 1.55 million shares, down by 28.26 per cent. The total shares exchanged was valued at GH¢1.75 million.

SIC, Total Petroleum and UT Bank Ltd dominated market activities on the bourse, accounting for 53.72 per cent of the week’s traded volume.  

The market recorded price movement in 11 equities with eight gainers and three losers.

Standard Chartered Bank added GH¢1.98 to close at GH¢15 per share. Total Petroleum and Ecobank Ghana Ltd added 5Gp each to settle at GH¢2.20 and GH¢6.91 per share respectively.

Societe Generale gained 8Gp to trade at 75Gp  per share.

Cocoa Processing Company Ltd and Benso Oil Palm Plantation settled at 3Gp and GH¢2.12 per share after gaining 1Gp and 3Gp respectively.

GCB Bank Ltd and Unileve Ghana Ltd gained 27Gp and 23Gp respectively to trade at GH¢4.19 and GH¢8.74 per share.

Ghana Oil Company Ltd shed 1Gp to close at GH¢1.11 per share.

HFC Bank Ltd trimmed 4Gp to settle at 68Gp. Tullow Oil lost GH¢2.05 to close at GH¢24.83 per share to end the list of decliners.

Forex market

The interbank forex market recorded a mixed performance as the cedi lost to two of its major trading partners.

The dollar stayed modestly higher against the local currency, following a strong growth in employment figures amidst talks on USA President, Donald Trump’s fiscal stimulus plans. 

The cedi depreciated by 0.52 per cent to exchange at GH¢4.30 per the dollar, pitching its year-to-date depreciation at 2.38 per cent.

In spite of surmounting risk and uncertainty ahead of general elections in Eurozone’s second-largest economy, the 19-bloc nation currency managed to stabilise versus the local currency as the Euro-area job creation strengthened to a nine-year high amidst improved business confidence. 

The cedi lost 1.3 per cent to trade at GH¢4.63 per pound, extending its year-to-date depreciation to 4.34 per cent.

The local currency, however, managed to outperform the British Pound, as downturn in the UK’s Services Purchasing Managers Index and unanimous decision of the Bank of England to keep its record low interest rate and monetary stimulus unchanged raised concerns about the economy’s growth forecast.

The cedi gained 0.02 per cent versus the Pound Sterling, pushing its year-to-date appreciation to 3.18 per cent.

Commodity market

Brent crude ended the week under review with a marginal gain week-on-week despite news of a rise in U.S crude supplies.

The black gold settled at 2.32 per cent higher to close at $56.81 per barrel amid surmounting tensions between the U.S and Iran over a ballistic missile test in Iran.

Gold price recorded its best weekly performance after disappointing U.S payroll data and geopolitical tension between the U.S and Iran.

The yellow metal thus, pared its losses, gaining 2.56 per cent to close last week’s trading at US$1,218.50 per ounce on the back of weakening U.S. dollar and treasury bond yields.

Cocoa price fell to a four-year low as traders speculated on the likelihood of contract defaults in top producer, Ivory Coast.

The price of the soft crop lost 1.1 per cent to end the week’s trading at US$2,072 per metric tons as bearish stock report issued by the International Cocoa Organisation further heightened concerns of oversupply.

In spite of rising to five and half-year high in mid-week trading last week, cocoa suffered loses to close down 4.04 per cent at US$1.4625 per pound as the market monitored whether tighter supplies will prompt Brazil and Vietnam to import  beans for the first time in decades. — IGS Financial Services/GB