In November, Ghana’s consumer inflation rate experienced a significant decline from 35.6% in October to 26.4%, marking an 8.8% decrease. The Statistician-General attributed this sharp drop to favorable base-effect comparisons with the previous year and the central bank’s proactive monetary policy tightening. The Bank of Ghana has maintained its benchmark policy rate at a historic high of 30% since July, signaling a pause after a cumulative tightening of 16.5 percentage points since November 2021. Officials emphasize their commitment to a tight policy stance until inflationary pressures are securely managed. The initial projection for year-end inflation was 29%, a notable decrease from the peak of 54.1% in December 2022. The sharp decline in the inflation rate is attributed to lower prices of food items like vegetables, cereals, and fish, with year-on-year food inflation at 32.2% and non-food inflation at 21.7% for November. Despite the positive inflation figures, Ghana is grappling with its worst economic crisis in a generation, engaging with multilateral lenders and creditors to restructure its debt. Year-on-year inflation reached 43.1% in July, accompanied by protests over the high cost of living and the depreciation of the Ghanaian cedi. The cedi lost about 11% of its value against the USD in the first half of the year, and last year, the government defaulted on its euro bond debt obligation.
Money Market
With an opening liquidity of N95.58 billion in repo on Friday following the bond and NTB auction settlements during the week, the interbank rate rose significantly, as evidenced by the 308- and 367-basis-point increase in the open buyback (OBB) and overnight rate (O/N), concluding the week at 22.25% and 23.25%, respectively.
We expect the rate to remain around similar levels next week.
Treasury Bills
This week, despite a negative financial system liquidity position, the Treasury bills market exhibited a bullish trend. There was notable buying interest across the board, resulting in a significant decrease of 268 basis points in the average benchmark yield, closing the week at 8.10%.
At the mid-week NTB auction, the DMO offered 13.58 billion across the standard maturities. The total subscription stood at 1.57 trillion, while 263.58 billion worth of securities were sold. The stop rates on the 91-day, the 182-day, and the 364-day papers dipped by 275 bps, 200 bps, and 225 bps to close at 6.25%, 11%.00, and 13.00%, respectively, while they maintained the previous auction close at 16.75%.
We expect a calm session at the start of the week ahead.
FGN Bond Market
The FGN Bonds market exhibited a bullish sentiment, particularly in the heightened interest observed for long-term maturities. However, there was some selling pressure noticed on the April 2029 maturity. The average benchmark yield experienced a notable decline of 47 basis points, reaching 14.64% week on week.
At the bond auction held on Monday, the DMO offered ₦360 billion across the 29, 33, 38, and 53 maturities. Total subscription at the auction was N886.42 billion, while about 273.63 billion was allotted to the market with stop rates of 15.50%, 16.00%, 16.50%, and 17.15%, compared to previous levels of 16.00%, 17.00%, 17.50%, and 18.00%.
We expect to see some buying interest next week, albeit on a less aggressive note.
Eurobond Market
During the week, the FGN Eurobonds market witnessed a primarily bullish trend, driven by the dovish stance of the U.S. Federal Reserve. Consequently, the average benchmark yield dropped by 53 basis points, stabilizing at 9.84%.
We expect the market to be swayed by developing events on the global front.
Currency Market
The value of the naira to the dollar appreciated by 1,903 bps to print at ₦889.86/$ this week at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Equities Market
Despite a 9 basis point decline in the NGS ASI on the final trading day of the week, the local bourse posted a 1.18% WoW capital appreciation, marking its ninth consecutive week of positive performance. The index’s weekly performance was notably influenced by increased demand in banking stocks: Access Corporation (+9.63% WoW), ETI (+9.40% WoW), United Bank for Africa (+7.33% WoW), and Zenith Bank (+6.00% WoW), along with gains in INFINITY [BLS] (+59.32% WoW), SCOA (+28.89% WoW), and other major stocks such as MTN Nigeria (+2.68% WoW) and BUA Cement (+0.52% WoW). Year-to-date performance remained positive at 41.24%, while the market capitalization closed at N39.62 trillion.
Consequently, the market breadth ended positively at 1.61, with 53 advancers and 33 decliners. In terms of trade metrics, both trade volumes and value experienced declines of 39.04% and 8.88% to 307.15 million units and N6.56 billion, respectively, on a week-on-week basis.
We anticipate the potential for upward momentum in the upcoming week, as stocks appear appealing for purchase.
