…Causes major portfolio shifts

Despite the assurance from Ghana’s central bank before the close of 2008 that the country’s financial markets remained resilient in the heat of the global financial turmoil, the turn of events in the first month of 2009 is pointing to a bearish year for the 2009, and investors appear to be re-orienting their portfolios in anticipation of the unfavorable trend.

Data from the Ghana Stock Exchange (GSE) and the Bank of Ghana indicates a diversion of investor resources from equities and long-term money market instruments to short-dated investments in the real sectors. Government of Ghana’s (GoG) short-dated securities has seen increasing over-subscriptions since January 2 this year, whilst interest in long-dated instruments keeps waning.

Clearly, gilt-edged securities have proved to be a safe haven for investors in bearish years, and with the current attractive quotations on such near-term money market instruments, analysts expect investors to push much more resources in that direction for the first two quarters of the year. Following recent hikes in inflation, rates offered on the 91 Day T-Bill ended the week at 24.69%, with the 182-Year Bill going for 26.22%. The 1- year and 2-year notes remained at 20.00% and 21.00%

The GSE All Share Index, the benchmark measure of performance on the Accra bourse ended last Friday at 10,253.88, with a year-to-date change of -1.70%. Six equities recorded declines in the past week just as it was in the preceding week. The laggards included Ghana Commercial Bank [GCB], which has fallen for a second straight week and has been the most traded equity for the past two weeks, SG-SSB, BOPP, EBG, SIC and UT.

The current situation on Ghana’s market has not been much different from what persists in other parts of the continent. It has been declines all over Africa, and the best performer on the continent, the BRVM has a year to date index change of -0.12%. Namibia, Nigeria and Egypt have already recorded significant drops.

Another worrying sign looming at Ghana’s financial market front has been indications that a number of non-resident foreign investors with holdings on the exchange are seeking to offload their stocks. This group of investors control close to 60% of the country’s stock markets.

Private sector resources being invested in the real sectors of the economy are also said to have received much boost, with the housing and construction sectors seeing the largest inflows.

Speaking to the Financial Intelligence in an interview, Mr magnus Ebo Duncan, Head of Economic Statistics at the Ghana Statistical Service (GSS) confirmed that investments in the real sectors of the economy had picked up in recent times.

He explained that the construction sector had received much of the inflows, with a lot of private investments going into the construction of commercial and residential units all over the country. He could not however establish whether the trend depicted a shift in portfolio from the capital markets as a result of the deepening financial crises at the global front. The crisis is expected to continue through the first two quarters of 2009, and seasoned economists have said that the world economy could go through its worst recession ever.