CAPITAL MARKETS & FOREX OVERVIEW MARCH 2018 EDITION

Transcription

1 CAPITAL MARKETS & FOREX OVERVIEW MARCH 2018 EDITION

2 NON-DISCLOSURE CLAUSE Union Capital Limited has prepared this material. Opinions expressed herein are current opinions as of the date appearing in this material only and are subject to change without notice. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this document may be reproduced in any manner, in whole or in part, without the prior written permission of Union Capital Limited. This information is provided with the understanding that with respect to the material provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Union Capital Limited shall not have any liability for any damages of any kind whatsoever relating to this material. You should consult your advisors with respect to these areas. By accepting this material, you acknowledge, understand and accept the foregoing. 2

3 CONTENTS 5 K E Y H I G H L I G H T S 6 T R E A S U R Y R AT E S 7 I N F L AT I O N 8 M O N E TA R Y P O L I C Y 9 G S E A N A LY S I S 10 FO R E X 11 A B O U T U N I O N C A P I TA L 3

4 KEY HIGHLIGHTS 10.6% Headline Inflation (February 2018) 18.0% Monetary Policy Rate (March 2018) 30.51% GH 64.38bn GSE-CI Year-to-date (End of March 2018) Market Capitalisation (End of March 2018) Macroeconomic Targets for 2018 Overall real GDP growth of 6.8% Inflation target of 8.9% Non-oil real GDP growth of 5.4% Overall fiscal deficit 4.5% 91-day Treasury yield (End of March 2018) 182-day Treasury yield (End of March 2018) Average GHS:USD (End of March 2018) Average GHS:GBP (End of March 2018) 13.4% 13.9% Macro Indices GSE Indices Treasury Yields Forex Indices 4

5 TREASURY RATES ANALYSIS Treasury yields were relatively flat in the month of February 2018 as the 91-day, 1-and 2-year notes remained unchanged. The 182-day bill lost a bps to close at 13.9%. YEAR-TO-DATE INTEREST RATE TREND In line with our expectations, the 91-day and 182-day bills in March 2018 continued to hover in the 13% region: - Yields on the 91-day bill increased by a basis point to close at 13.36% whilst the 182-day bill remained unchanged at 13.9%. The 1-year note remained constant at 13.9% whilst the 2-year note lost 68bps to yield 16.5%. Fixed income remains an attractive investment for investors even in the declining interest rate environment. We recommend longer dated treasuries as they post attractive yields. 91-Day 182-Day 1-Yr Note 2-Yr Note CURRENT* 13.36% 13.90% 15.00% 16.50% HIGH 13.37% 13.91% 15.00% 17.50% LOW 13.31% 13.82% 15.00% 16.50% AVERAGE 13.34% 13.89% 15.00% 17.10% MEDIAN 13.35% 13.89% 15.00% 17.18% *as at the end of March 2018 YTD 2018 SUMMARY Source: Bank of Ghana,

6 INFLATION RATE ANALYSIS Headline inflation recorded a marginal increase in February 2018 at 10.6%; an increase of 0.3% from 10.3% recorded in the previous month. Prices advanced faster largely due to food and alcoholic beverages and housing and utilities. YEAR-ON-YEAR INFLATION TREND The food inflation recorded 7.2% compared to 6.8% in January The main price drivers for the food inflation rate were fruits (9.8%) and non-alcoholic beverages (9.3%). The non-food inflation rate recorded 12.2% compared with 12.0% recorded in January The main price drivers for the non-food inflation rate included transport (18.9).This was closely followed by clothing and footwear (16.6), recreation and culture (13.2%), miscellaneous goods and services (12.9), alcoholic beverages and tobacco (8.8%), restaurants and hotels (8.3%), communication (8.0%), housing and utilities (7.8%). Education subgroup recorded the lowest inflation of (6.1%). At the regional level, four regions (Upper West, Greater Accra, Brong Ahafo and Ashanti) recorded inflation rates higher than the national average of 10.6%. Upper West region recorded the highest year-on-year inflation rate of 11.7% while the Upper East region recorded the lowest year-on-year inflation of 8.1% Source: Ghana Statistical Service,

7 MONETARY POLICY RATE The Monetary Policy Committee (MPC) of the Bank of Ghana, reduced the policy rate by 200 basis points to 18% at the end of the first quarter in The committee cited subdued core inflation, stable prices and positive growth outlook as basis for the reduction. POLICY RATE TREND The Committee observed that the pace of global growth has been firmed up. Global financing conditions remains favourable sustained by relative low interest rate in most advanced economies. The outlook for growth, in the near term remains positive supported by crude oil production, gradual recovery in the non-oil sector and favourable business and consumer sentiments. Although, the pace of the growth reflects some improvements, it is still below the potential due to moderated credit growth which is largely dependent on nonperforming loans, tighter credit conditions and corrections in the balance sheets in the banking sector. The disinflation process continued to improve over the first two months with significant moderation in price pressures. Headline inflation and core inflation reduced alongside easing inflation expectation, an indication that the disinflation process remains well anchored. Source: Bank of Ghana,

8 GSE ANALYSIS The GSE-CI and the GSE-FSI posted appreciations of 30.51% and 32.10% on a year-to-date respectively. GSE-CI YTD TREND Total market capitalisation declined down by 2.42% to GHS billion as compared to GHS in February Over the month under review, the top five gainers included on the local bourse were Goil (GHS 0.92), Standard Chartered Bank (GHS 0.67), Societe General (GHS 0.57), Uniliver (GHS 0.54) and CAL Bank (GHS 0.24). The laggards were GCB Bank (GHS 0.67), Ecobank Ghana (GHS 0.50), Access Bank (GHS 0.40), Fanmilk (GHS 0.12) and Enterprise Life (GHS 0.11). GSE TRADING SUMMARY - MARCH 2018 DETAIL Feb 2018 Mar 2018 HANGE (%) GSE-CI 3, , % GSE-CI YTD 29.36% 30.51% GSE-FSI 3, , % GSE-FSI YTD 34.65% 32.10% MARKET CAP. (GHS' BN) % MARKET CAP. (US$ BN) VOLUME TRADED (mil. units) % VALUE TRADED (GHS' mm) % VALUE TRADED (US$'mm) Source: Ghana Stock Exchange, 2018 Source: Ghana Stock Exchange,

9 FOREX ANALYSIS The Ghanaian Cedi witnessed a positive performance as it appreciated against all the major trading currencies in March FOREX PERFORMANCE AGAINST THE CEDI - The major trading currencies included Australian Dollar (0.70%), CFA France (0.20%), Swiss Franc (1.60%), Euro (0.1%), United States Dollar (0.1%), British Pound (0.80%) and the Chinese Yuan (0.20%). On a year-to-date, the Ghanaian Cedi has depreciated against all but the Australian Dollar and the United States Dollar. It appreciated (2.0%) and (0.3%) against the Australian Dollar and the United States Dollar respectively. CURRENCY AVERAGE HIGH LOW MEDIAN AUD CFA CHF GBP USD YUAN Source: com. Daily midpoint FX rates. Source: com. Daily midpoint FX rates. 9

10 Who We Are Union Capital Limited (UCL) is an impact-investment banking firm providing Corporate Finance, Investment Advisory, Fund Management and Private Equity and Venture Capital. Union Capital Limited is licensed by the Securities & Exchange Commission (SEC). What We Bring Professional Independence We provide our clients with pure, unbiased advice Time We move as quickly as desired by our clients Deep Industry Relationships To be the preferred investment banking firm by generating superior financial and social returns To provide investment management and advisory services to enable our clients achieve optimum financial results and social impact We have built strong, trusted and long-standing relationships with key market participants Expertise Our track records allow us to offer our clients the greatest strategic insight and critical judgment required for success. Flexible & Attention To Detail We attach high-level attention to each transaction and accommodate our clients concerns Simplicity If you can't explain it to a six-year-old, you don't understand it yourself 10

11 Our Services: Funds Management Union Capital offers much more than the standardized, off-the-shelf fund management services available. We strive to arm the client with portfolio protection when the market declines, and relative returns when the market rises. In selecting investment into a portfolio, growth, income, capital preservation, and liquidity are the objectives that guide us. Our Unique Products UPAM UMIP UFLEX UDIP UNION PRIVATE ASSET MANAGEMENT Individuals and Institutions who require higher returns to compensate for the extra risk taken. UNION MUTUAL INVESTMENT PLAN An investment which targets as low as 1 into a pool for growth and liquidity UNION FLEXIBLE INVESTMENT Investors with very short term needs (within a year) to meet but need to invest in a viable investment to enable them meet those needs UNION DISCRETIONARY INVESTMENT PORTFOLIO High net worth Individuals and Institutions, Endowment Funds, Welfare funds, Provident funds. Fixed Income of 91, 182 and 365 days instruments 11

12 Our Services: Private Equity and Venture Capital We acquire shares of growth-oriented and profitable businesses that meet our investment objectives by providing capital, strategic management and advisory services We invest in opportunities with financial returns and positive socio economic impact. We offer professional services to both the private and public sectors in the following sectors: Financial Services, Public Sector, Energy & Mining: Mining, Oil and Gas, Renewable energy; and Consumer & Industrial: FMCG, Telecoms, Manufacturing, Construction, Transport, Media and Services.. 12

13 Our Services: Corporate Finance and Advisory Offers independent, professional solutions and insights through phases of deal cycle to create value and successfully execute your deal strategy. Our sectors of focus include: Real Estate, Consumer Retail & Healthcare, Energy, Education, Financial Services, and Technology. 13

14 CONTACT INFORMATION Location: Union Capital Limited 753 Pawpaw Street East Legon, Accra Ghana Post: P. O. Box KN 5569 Kaneshie, Accra Ghana Telecom: M: M: E: W: 14