Trading in fixed income market falls by 39% to GHS 5.5bn at end-March 2023
The GFIM, Ghana’s primary fixed income market, has experienced a notable decline in volume traded during March 2023. The total volume of trades was recorded at 5.57 billion, a decrease of 39.26% compared to the previous month, and an even more significant decrease of 80.18% compared to the same period last year. While this reduction in trading activity could be attributed to a number of factors, including market volatility and investor caution, it is important to consider the context of other developments in the Ghanaian financial markets during this period.
One notable development is the significant decrease in yields on short-term government securities. The 91-day Treasury bill, for example, saw yields decline from 35.55% at the beginning of March 2023 to 19.39% by the end of the month. This trend could be seen as a positive development for investors seeking to generate returns on fixed income investments, as lower yields could lead to increased demand for securities with higher yields.
Another notable development during March 2023 was the introduction of new GOG bonds, which witnessed thin trading during its first full month on the market following the Debt and Equity Market Access Project (DDEP). It remains to be seen how these bonds will perform in the coming months, and whether they will attract significant trading activity from investors.
Turning to the equity markets, the GSE Composite Index (GSE-CI) experienced a significant increase of 14.01% during March compared to the previous month. This increase was driven by strong gains in some share prices, including TOTAL, MTNGH, UNIL, BOPP, and GGBL. Dividend announcements from some listed companies and investors seeking to diversify their holdings may have also contributed to the continued rally of the GSE-CI.
Volumes and values traded in the equity markets were up significantly during March, with a 2,730% increase in volumes and a 588% increase in values compared to the previous month. These increases were largely due to block trades in MTN Ghana shares, which saw significant demand from investors.
However, it is worth noting that the GSE Financial Stock Index has achieved a year-to-date loss of 11.98%, in line with expectations of reduced profitability for financial stocks in 2022. This trend could be attributed to a number of factors, including increased competition in the financial sector, regulatory changes, and market volatility.
Overall, the developments in the Ghanaian financial markets during March 2023 suggest a mixed picture for investors. While the decline in volume traded in the fixed income market may raise concerns for some investors, the decrease in yields on short-term government securities and the continued rally of the equity markets could be seen as positive developments. However, the challenges faced by financial stocks highlight the need for investors to exercise caution and conduct thorough analysis before making investment decisions in the Ghanaian financial markets.
