A Interbank Rates
Gse Closes Week On Impressive Note

The stock market?s rally continued last week with gains in seven equities lifting the market indices. Volume and value of shares traded were also impressive boosted by a block trade in Produce Buying Company.

On the strength of advancers, the week ended with the benchmark Composite Index (CI) adding 37.29 points to close at 2,255.52, representing a year to date return of 5.14%.

The Financial Index (FI) also bagged 48.57 points to close at 1,940.23 . This brings its return this year to 3.39%.

What moved the market

Stanchart led gainers during the week ?under review and leaped by 73GHp to GHC16.36. Ecobank Ghana on the back of increased demand also added 32GHp. Fan Milk followed adding 9GHp to GH?6.06 while Benso Oil and Enterprise Group also gained 6GHp and 4GHp to GH?3.25 and GH?1.97 respectively. Mechanical Lloyd climbed 2GHp to close the week at 35GHp. UT Bank and Societe Generale completed the list edging up a pesewa each to 45GHp and 77GHp respectively.

On the other hand, PZ Cussons, the lone laggard this week was under selling pressure shedding a pesewa to 68GHp.

Trading Activity

A total of 8.2M shares valued at GH?4.40M changed hands in twenty-two equities compared with the previous week?s volume of 1.96M shares valued at GH?2.5M.

Produce Buying Company recorded the highest volume (83.8%) and Value (26.7) of shares traded.

Outlook

We expect the market to sustain its upward drive in the coming week as year-end financial results trickle in. Stocks likely to give the boost include Societe General, Ecobank Ghana, UT Bank, Fan Milk and CAL Bank, Stanchart.

On the flip side, we expect equities like Guinness Ghana, PZ Cussons and Starwin Products to lose some grounds as some investors seek bargain deals.

BOG releases 20M Dollars to arrest cedi deprecation

The central Bank of Ghana on Thursday released?US$20 million onto the market as part of steps to stabilize the local currency.

This measure was taken to correct the drastic depreciation of the local currency which has brought some untold hardship to some businesses and individuals that depended on dollars for their operations.

However, we do not expect the amount released to immediately amend the situation since the current challenge?is due to frequent imports of goods in the country. To help address the situation in the short term, the existing laws to punish those who quote and price?their products in dollars should be enforced.

Fan Milk posted lower than expected profit in full year 2013 results

The Directors of Fan Milk have released their financial results for the year ended December 31, 2013.

The Ice cream maker posted lower than expected profit in the full year ended December 31, 2013; as electricity load shedding, high utility rates and general lower consumer confidence for the most part of the year resulted in a scale back in the activities of its agents and distributors. Revenue for the year came up to GH?139 million, down from the GH?147.2 million registered in 2012.

Operating Profit decreased by 4.5M to GH?28.18 million while Cost of Sales, Distribution Costs, Administrative Expenses and Depreciation rose from the figure recorded a year earlier. Profit after- tax? was GH?21.38 million, a decrease of 27.24%.

Fan Milk is currently trading at GH?6.89 at a P/E ratio of 27.8X and a P/B ratio of 11.51

Though the company is currently extending gains, it is likely the price will remain steady because of its huge potential growth as well as its strong dividend record.

At the auction held last Friday January 24, 2014, short ? term treasury rates changed; the 1-Year Note remained steady but the 2-Year Note decreased.

The 91-Day bill added 2 basis points to 19.62%. The 182-Day bill also inched up by a basis point to 19.44%. The 1-Year Note was however unchanged at the previous week?s 17.0% but the?? 2-Year Note trimmed 5 basis points to 16.0%.

A total of GH?590.46 million bids were submitted by dealers with the Central Bank accepting GH?575.49 million. On the currency market, the Cedi closed on a low note against all the major currencies.

   Average interbank rates

Average interbank rates

With the U.S economy growing as a result of increased?consumer-spending?more than forecasted, the local currency weakened against the Dollar. The cedi thus shaved 3.33% this week to close at GH?2.40 against the greenback.

The Cedi depreciated by 2.38% against the Euro as the?Euro-zone inflation?remained below half of its January target. Dealers on the currency market quoted GH?3.25.

The sterling also rose 2.55% against the Ghana Cedi in response to news of strong retail-sales increase; and the recovering of UK?s economy. The interbank market closed the week with dealers rates averaging GH?3.40.

Against the Swiss Franc and the South African Rand the local currency also dropped 2.88% and 1.77% with average rates by dealers at GH?2.65 and GH?0.21 respectively.

Source Merban Stockbrokers

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