The fixed income market of the Ghana Fixed Income Market (GFIM) has recorded a massive jump in volume traded while the value reached new height in June 2023.
According to the fix income market report, GFIM closed the month of June with a notable increase in traded volume of 5.41 billion. This rise represents an 8.20% growth compared to the previous month.
However, when compared to the same period in 2022, the figures reveal a significant decline of 78%. Short-term Government securities dominated the market activity, accounting for an impressive 77.80% share.
From January to June 2023, the cumulative traded volume amounted to 40.89 billion, indicating a substantial 67% decrease in comparison to the GHS 124.07 billion traded during the corresponding period in the previous year, 2022. This data highlights a significant slowdown in trading activity within the GFIM.
The secondary market activity on the Ghana Fixed Income Market was primarily driven by trading in Treasury bills (T-bills), while bond trades experienced a general lack of momentum.
However, last week, the aggregate volume of bonds traded saw a substantial increase of 130.57% week-on-week (w/w), reaching GH¢260 million. Conversely, T-bill volumes declined by 3.96% w/w, amounting to GH¢1.09 billion. Bond trading predominantly occurred close to par value, and the majority of activity focused on the front end of the yield curve.
Meanwhile, the GSE Composite Index achieved its second-highest monthly return to date, showing a remarkable increase of 296.74 points. This positive performance in the first half of the year has resulted in a year-to-date return of 14.90%.
One key factor influencing market dynamics is the significant yield differentials between nominal money market instruments, such as T-bills, and bonds. As nominal money market instruments offer higher returns, investor attention has been largely directed towards these instruments, resulting in subdued activity on the bond market.
GSE Financial Stock Index
The GSE Financial Stock Index also demonstrated improvement, gaining 14.56 points and reducing year-to-date losses to 17.57%. Furthermore, the market capitalization of the GFIM reached a notable all-time high of GHS 70.24 billion.
This achievement can be attributed to the enhanced investor confidence observed in the market, along with several listed companies announcing dividend payment dates.
Despite the positive market performance, trading activity witnessed a significant decline in both volume and value. Volume traded decreased by 87.06%, while value traded experienced an 86.55% decline compared to the previous month.
Notably, the top five price gainers for the month were GGBL (28.48%), MTNGH (21.10%), CAL (20.00%), GLD (18.16%), and SCB (3.28%), showcasing notable price fluctuations within the market.
Judging from the data above, it can be deduced that the GFIM fixed Income market exhibits mixed trends, with growth observed in the traded volume compared to the previous month.
On the other hand, the decline in year-on-year figures highlights challenges faced by the market. The positive performance of the GSE Composite Index and market capitalization reflects improved investor confidence, yet the significant decrease in trading activity warrants attention to revitalize market participation.
Given the impending second round of DDEP, it is anticipated that activity in the secondary end of the market will experience a subdued performance given the fact that investors will be cautiously awaiting the outcome of the debt exchange programme.
