Bond market sluggish as turnover falls by 48.5%; T-Bills dominate trading on GFIM
T-bill re-discounting has once again taken center stage on the Ghana Fixed Income Market (GFIM) as last week’s trading activity saw GH¢1.08 billion worth of T-bills exchanged, overshadowing the subdued bond market.
Secondary market bond turnover for the week amounted to a meager GH¢130 million, representing a significant decline of 48.5% compared to the previous week and accounting for a mere 0.01% of the aggregate volume traded.
Bonds traded at an average price of 100.13, with approximately 85% of the transactions recorded either at par or at a premium. This indicates that bonds were primarily transacted at their face value or above. However, bond market activity remained limited, reflecting a lack of investor appetite.
Among the T-bills, the higher-yielding 364-day bills emerged as the dominant choice for investors, accounting for over 50% of the total T-bill value traded last week. Domestic investors appear to be strategically positioning their portfolios to take advantage of these higher yields and mitigate potential near-term portfolio volatility.
The expectation is that once economic and structural policy interventions gain traction, yields may correct, prompting investors to lock in favorable rates now.
The preference for T-bills, especially the longer-dated 364-day instruments, highlights investors’ cautious approach as they seek stability and yield in the current market environment.
By capitalizing on higher yields offered by these T-bills, investors aim to optimize their returns while managing potential market uncertainties.
The dominance of T-bill re-discounting and the limited bond market activity demonstrate the evolving investment strategies of market participants in response to prevailing economic conditions. As Ghana’s economy continues to navigate challenges, the focus on T-bills and yield optimization underscores the importance of carefully managing investment portfolios to navigate potential volatility and capitalize on favorable market opportunities.
