Review of Investment Products in Ghana -July

The performance of the financial market in the month of July epitomes the adjustment taking place in the economy as a whole. The equity market did not record any recovery but rather experienced further decline. Among others, weak consumer spending as evidenced in falling turnovers accounted for the poor show of some equities. Yields on short-term money market instruments began adjusting to the reduction in the reserved requirement and the prime rate with an additional decline in treasury bill rates. The cedi was relatively stable on the currency market. Bearish Trend on Equity Market On the equity market the bearish sentiments deepened in July sending the DSI falling by 12%. In view of weak consumer spending, it was estimated that fortunes of most companies would decline in the second quarter. In a resultant panic, investors rushed to exit the stock market, thus depressing stock prices further. The performance of equity mutual funds fell in response to the declining market development. The SAS Fortune Fund experienced a plunge of 8.9% followed by the HFC Equity Fund with an 8% drop. The nation's Premier Equity Fund, Epack shed 3.7% whilst the NTHC Horizon fund fell by only 0.2% in the whole of July. The current situation in the equity market makes a strong case for wider international reach in asset allocation. Money Market Yields Falls With declining yields on money market instruments, a marginal gain of 1.3% by Databank money market fund was remarkable. The Mfund closed July at ¢1,186.93 per share with an annualized yield of 17.39%. The HFC Unit Trust shed 0.1% in July to close the month with ¢1,390 per share. The continuous fall in treasury bill increasingly became unappealing to short – term investors. At the end of July, the Bank of Ghana and the Government of Ghana issues hovered around 15.53%, 16.43%, and 18% for the 91 day, 182 – day and 1 year treasury note respectively. Cedi Remains Relatively Stable The cedi was outstanding on the inter-bank currency board. Over the past month, the cedi remained stable to the dollar whilst appreciating by 2.4% to the euro. It however dropped by 1.4% to the pound sterling. At the end of July the local currency was quoted at¢ 9,057.73, ¢16,103.75, and ¢11,192.07 to the dollar, pound sterling and the euro respectively. The cedi is expected to continue in this trend along with improved earnings from cocoa and gold. Other factors that will contribute to the cedi remaining firm are increased remittances from abroad, inflows from international debt cancellation and the HIPC relief benefits.

The table below shows the performance of the various investments for the month of July. Investment Products