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Markets update

2020 Q4 Market Report

Cedi Performance and Macro-Economic Indicators

At the end of 2020, the year-to-date (YTD) depreciation rates of the cedi against the US dollar, the British pound and Euro were -3.93%, -7.08% and -12.07%, respectively. The performance of the cedi can be attributed to lower petroleum revenues and capital flight as uncertainties of the impact of the COVID-19 pandemic on the economy continue to linger.

At the end of the year 2020, the inflation rate stood at 10.4% compared to 7.90% as of December 2019. Despite the non-food group recording a year on year inflation of 7.7% in December 2020 compared to 8.5% in December 2019. The increase was due to an increase in the food and non-alcoholic beverages group which recorded a year on year inflation of 14.1% in December 2020 compared to 7.2% recorded in December 2019. Overall, inflation is expected to be moderate but remain in the double-digit going forward, due to weakened aggregate demand weighing on price pressures.

The Bank of Ghana reduced the monetary policy rate from 16.00% to 14.50% as a result of the extraordinary circumstances created by the COVID-19 pandemic, a widened budget deficit and a residual financing gap, which requires some monetary discipline to preserve the anchors of macroeconomic stability.

The table below provides details of the rates and movement in the currency market.

Economic Review

 Year 2020Year 2019Change (YoY)
Monetary Policy Rate14.50%16.00%1.50%
Inflation Rate10.40%7.90%2.50%
Inflation and Monetary Rate Comparison

 31st December
31st December
Yearly Depreciation
US Dollar to Ghana Cedi5.765.533.93%
British Pound to Ghana Cedi7.877.327.08%
Euro to Ghana Cedi7.066.2112.07%
2020 Interbank Forex Rates (GH₵)

Government Borrowing

The Government of Ghana issued a USD 3Billion Eurobond, which was issued in 3 tranches, the first was USD1.25 billion with coupon rate of 6.375% for 7 years, USD1 billion at 7.75% for 14 years and the last USD 750 million at 8.75% for 41 years, the longest dated bond by an African country. The Eurobond issues were about 5 times oversubscribed, attracting about USD 14 Billion in bids. The issuance was to help improve the energy sector, retire maturing debt and support on-going infrastructure development.
The 91-, 182- and 364-Day Treasury Bills began the year at 14.70%, 15.15% and 17.90%, respectively and decreased to 14.09%, 14.12% and 17.00%, respectively at the end of the year. In 2020, the average, interest rates for the 91-Day, 182-Day and 364-Day T-bills were 14.22%, 14.39% and 17.13%, respectively.

The government also issued five 2-Year notes at an average interest rate of 18.50%, seven 3-Year bonds at an average interest rate of 19.55%, three 5-Year bonds at an average interest rate of 20.27%, a 6- Year bond at an interest rate of 19.50% and two 7-Year bonds at an average coupon rate of 20.25%.Compared to 2019, with the exception of the 5-year bond, interest rates of GoG securities at various maturities trended downwards. The 6-Year and 7-Year bonds were the first of their kind to be issued.

91 Day T-Bill14.71%14.22%0.49%
182 Day T-Bill15.16%14.39%0.78%
364 Day T-Bill17.84%17.13%0.71%
2 Year T-Note19.64%18.50%1.14%
3 Year T-Bond19.85%19.55%0.30%
5 Year T-Bond19.63%20.27%0.64%
Yearly Average Interest Rate (2019 and 2020)

Comparative Yield Curve (2019 – 2020)

Stock Market Performance

The stock market could not recover from its negative return from 2019 as the GSE Composite Index (GSE- CI) and GSE Financial Stock Index (GSE-FSI) closed 2020 with a year to date (YTD) returns of -13.98% and – 11.73%, respectively compared to -12.25% and -6.23% in 2019. The negative returns of the indices were worsen by the COVID-19 pandemic that hit Ghana in March, 2020, this has resulted in some level of uncertainty in the market.

Ghana Stock Exchange Indices Trends (Year to June 30th)

Oil sector companies have had to deal with the erratic movement of world crude oil prices, which will make it difficult for these to adequately plan their operations. Manufacturing firms have had to battle with not being able to operate at full capacity in order to comply with social distancing protocols, as well as the cost of providing PPEs for staff, which is likely to result in an increase in expenses. Banks have had to adequately manage their non-performing loans (NPLs). Per the latest Bank of Ghana Monetary Report on Banking Sector Developments, NPLs increased from 14.50% in Q1 2020 to 15.70% in Q2 2020 (15.7%) and marginally dropping to 15.50% in August 2020. Banks have also had to give borrowers moratoriums on their loans and also reduced interest rates on loans due to the COVID-19 pandemic, which will affect their bottom line. Based on these circumstances, it is obvious that investors have reflected these information in the pricing of the stocks on the market, resulting in price declines.

At the end of 2020, there were 3 gainers. CPC was the top gainer with a yearly return of 50.00%, closing the year at GH₵0.03 (Year High – GH₵0.03, Year Low – GH₵0.02). CMLT was the second largest gainer ending the year at GH₵0.11, which represented a 22.22% yearly gain (Year High – GH₵0.11, Year Low – GH₵0.09). ALW gained 10.00% ending the year at GH₵0.11 (Year High – GH₵0.11, Year Low – GH₵0.10). On the other hand, FML led the pack of 17 losers, ending the quarter at GH₵1.08, this represents a yearly loss of 73.79%. TLW lost the least during the year, its price dropped by 0.17%, closing the year at GH₵11.92 Prices of 11 stocks remained flat.

The performance of the losers of 2020 has been outlined in the tables below.


Year High
Year Low
2nd Jan
2020 (GH₵)
31st Dec
2020 (GH₵)
Loss (%)
2020 Losers – Ghana Stock Exchange

Some developments that occurred during the year on the stock exchange included the change of names of some of the companies listed to the bourse. The change of names was necessitated in order to comply by the provisions of the Companies Act 2019, Act 992, which requires that all public companies limited by shares must have the words Public Limited Company or its abbreviated form “PLC” as a suffix to their registered name. Some of the companies that changed their names during the year 2020 were CAL, SCB, SOGEGH and FML.

During the fourth quarter, Unilever Overseas Holdings has increased its equity stake in Unilever Ghana (UNIL) to 74.50% following the acquisition of additional 7.94% equity stake from Hongkong Shanghai Arisaig Africa Consumer Fund. Unilever Overseas Holdings therefore increased its equity stake in Unilever Ghana to 74.50%. The Free of Payment (FoP) transaction was executed in Ghana and involved the purchase of 4,962,500 ordinary shares in UNIL which is listed on the Ghana Stock Exchange (GSE).
During the third quarter, Ms. Abena Amoah was appointed as Deputy Managing Director of the Ghana Stock Exchange. She is responsible for the operational activities of the Exchange, namely, Trading and Surveillance, Listings and New Products, the Ghana Fixed Income Market and the IT systems of the Exchange, as well as assisting the Managing Director in defining and implementing the Exchange’s corporate strategies and plans, among other responsibilities. Ms. Amoah is the first woman to occupy this position since the establishment of the Exchange.

The GSE suspended the listing of Sam Woode Limited as the company suspended its operations in accordance to Rule 13(4) (a) of the GSE Listing Rules, which empowers the GSE to suspend listing where a listed company has ceased to be an operating company. SWL has had to suspend its operations due to being hard hit by the introduction of the new GES curriculum, which led to a subsequent obsolescence of its textbook inventories and the stoppage of its book sales operations.

Mechanical Llyod PLC (MLC) also announced its intention to de-list from the GSE subject to shareholder, GSE and SEC approval. The proposed de-listing is in line with the company’s strategy to review its business model and structures to re-position itself going forward and will not impact job security, day-to-day operations and relationships with stakeholders.

PZ Cussons Ghana Limited (PZC) announced it will commence the settlement of successful tenders after closing its tender offer and successfully reconciling all the tenders received. The tender offer was priced at GH₵ 0.45 per share representing a 15.4% premium above the market price of GH₵ 0.39, which is the higher of the average 12-week market price and the market price on the company’s AGM Date.
MTN Ghana filed its papers at the Supreme Court seeking review regarding the declaration of MTN Ghana as a Significant Market Power (SMP) by the National Communications Authority (NCA). This was after the High Court dismissed the company’s application for a judicial review. The NCA declared MTN a Significant Market Power and therefore imposed special regulatory restrictions on the company. MTN Ghana indicated that the restrictions have the potential to inhibit the company’s growth and innovativeness and is seeking a judicial review that will ensure procedural fairness in the restrictions imposed on the firm.

During the second quarter the GSE expelled Liberty Securities Limited and First Atlantic Brokerage Limited. The expulsion was because of their violation of some market rules such as operating without an Authorized Dealing Officer for more than three months, low liquidity position, eroding shareholders’ funds and inactivity on the market due to the lack of an ADO to execute trades. The GSE with the approval of the Securities and Exchange Commission (SEC) amended its rules on price movement. The objective of the amendment to enhance stock price discovery and a fair market pricing. The new rule gives the price range and volumes that will result in a change of share price. MTN Ghana also announced it is seeking redress in the law courts following the National Communications Authority’s (NCA) decision to impose restrictions on its business. The NCA declared MTN a Significant Market Power (SMP), and therefore imposed special regulatory restrictions on the company. MTNGH indicated that the restrictions have the potential to inhibit the company’s growth and innovativeness and is seeking a judicial review that will ensure procedural fairness in the restrictions imposed on the firm.

During the first quarter, Mr. Ekow Afedzie as the Managing Director of the Ghana Stock Exchange. He was the Deputy Managing Director for the exchange for 10 years. His rich experience and remarkable dynamism is expected to help the Exchange during this critical period of modernizing and transitioning from a frontier market to an emerging market to attract more investors and improve market efficiency. Another highlight of the quarter was the approval of a merger of three Pharmaceutical firms – Dannex Limited, Ayrton Drugs Manufacturing Limited and Starwin Products Limited to form a new entity – DAS Pharma PLC by the Exchange. A remarkable advancement of the market was the signing of Memorandum of Understanding (MoU) between the Ghana Stock Exchange (GSE) and the London Stock Exchange Group (LSEG) to collaborate and support the development of the capital market in Ghana. The LSEG will assist the GSE move from a frontier market to an emerging market, support cross-listing between the LSE and the GSE and raise awareness on capital raising opportunities.

Current Economic Environment and Investment Implications

The cedi experienced some pressures since the tail end of the first quarter of 2020 which has continued to the fourth quarter of 2020, as some foreign investors began to disinvest from local bonds amid growing uncertainty about the COVID-19 pandemic. The Cedi is likely to continue to further depreciate during the next quarter.

On the capital market, the GSE Composite and GSE Financial Stock Indices continue to record negative returns. We do not anticipate any significant changes in the market’s performance in the short term as investors adopt a wait-and-see attitude amidst increasing uncertainties of the impact of the COVID-19 on the economy, as well as the outcome of the election petition. Factors affecting various sectors listed on the stock market which could lead to possible price declines have been explained earlier in the report. The possible decline in share prices presents buying opportunities for investors who would like to take advantage of the low share prices on the stock market. Investors can increase shareholdings in anticipation of future price appreciation.

On the Ghana Fixed Income Market, yields are expected to rise over the short term due to government’s borrowing appetite stemming from a growing deficit which can be attributed to the COVID-19 pandemic and government spending in order to fund their projects. This however, presents buying opportunities for investors interested in both short and longer dated securities, especially at the upper end of the yield curve, as investors can purchase longer term securities to maximise returns. Eurobond prices in the frontier and emerging markets have significantly dropped and consequently yields have increased. This may present an opportunity for investors to increase their returns on Eurobonds investments.

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