MARKET SUMMARY REPORT 4th November 2014 TABLE OF CONTENT Economy Highlight  Banks record profits despite harsh economic conditions  Finance Minister likely to present 2015 Budget in November Top Business  Bank of Ghana cautions NBFIs  Professional service export earnings outstrips oil revenue Foreign Bids  Oil Extends Slide on Saudi Price Cut as U.S. Supply Seen Rising  Gold Trades near Lowest Level Since 2010 on Dollar’s Strength Market Information      Treasury Bill Rate Bank of Ghana Indicative rate GSE Summary Commodity News Investment Funds Quote OF THE DAY A man has to learn that he cannot command things…………. Economy Highlights Banks record profits despite harsh economic conditions Source: Ghana Web Banks in Ghana are on course to achieving another record for the 2014 fiscal year following impressive third quarter results. This is not very surprising because of the high interest regime in Ghana though good for banks but unfavorable to the Ghanaian economy. With only two months more to end the year, Ghana’s biggest indigenous bank and second biggest bank, GCB recorded a sterling 53.78 percent profit to GHc205.38 million at the end of September 2014. According to its unaudited financial results, the bank’s interest income from both loans and investments grew from GHc396.4 million a year before to GHc497.7 million at the end of September 2014. Its balance sheet also remained strong as deposits hit GHc2.7 billion during the first nine months of this year compared to GHc2.3 billion Cedis in September 2013. At the same time, loans and advances also grew from GHc942.84 million to GHc.27 billion Cedis at the end of the third quarter. Another indigenous bank, CAL also saw its income going up by 59.2 percent to GHc103.27 million Cedis during the first nine months of this year. It achieved GHc37 million from fees and commission at the end of September 2014, compared with GHc22million a year before. Customer deposits also shot up from GHc742 million a year before to GHc926 million in the first nine months of 2014. Finance Minister likely to present 2015 Budget in November Source: Myjoyonline Finance Minister Seth Terkper is likely to present the 2015 Budget to parliament by November 20. This is however subject to the approval of parliament. Joy Business gathered from its sources close to the Finance Committee of Parliament that despite the current negotiations with the IMF, government can still go ahead with the presentation. There were fears, initially, that because of the current negotiations with the IMF, government might not be able to meet the constitutional requirement, which enjoins it to present the budget at least a month before the beginning of the implementation of that the new budget. But according to persons close to the preparation of the Budget, government can still go ahead, because it can reach some agreement with the IMF even in the middle of the negotiations. This means government can go ahead with its economic policy and financial statement for 2015. But for some economists, the government’s biggest challenge for next year would be how to check its rising expenditure, in the face of labour agitations for higher wages as well as calls for complete infrastructure projects. However, for those working on the budget, the challenge facing government now is whether it should go ahead with some expenditure cuts to address the budget deficit and raise more revenue to match its rising expenses. According to the finance ministry's guidelines for preparation of the budget, government is hoping to mobilize 43 billion Ghana cedis in revenue for next year, up from the 26 billion Ghana cedis it hoped to get this year. Top Business Bank of Ghana cautions NBFIs Source: Ghana Web The current rate at which some Non-Bank Financial Institutions (NBFIs) are clamoring for expensive wholesale funds instead of mobilizing cheaper deposits from ordinary savers is worrying, Millison Narh, Deputy Governor of the Bank of Ghana (BoG) has disclosed. He stated this yesterday in Accra during the inauguration of a new branch of Best Point Savings & Loans Limited at Makola. According to him, the mobilization of wholesale funds at interest rates higher than Treasury bills raises the cost of funds of NBFIs and results in high lending rates. “Thus the high intermediation costs ultimately lead to non-performing loans which can result in financial distress. NBFIs, especially the savings and loans companies, must therefore be mindful of these tendencies and adhere to their intended role of mobilizing cheaper deposits from ordinary savers.” Mr. Narh was unhappy with shareholders of NBFIs who use their institutions to finance other businesses through the mobilization of deposits from the public and on-lending same to businesses connected to owners and directors of the financial institutions. “Let me sound a word of caution that shareholders of NBFIs should desist from such activities and respect the limits set in the banking Act with respect to lending to connected entities to avoid an abuse of their licences,” the Deputy Governor mentioned. Professional service export earnings outstrips oil revenue Source: Business & Financial Times The annual foreign exchange earnings from professional services export trade such as education, medical tourism and consultancy services is about five hundred percent higher than the revenue accrued from the Oil and Gas industry. The World Trade Organisation (WTO) estimates that in 2013 Ghana’s total professional services trade accounted for about US$2.5billion; though a marginal fraction of the world total services of US$4.64trillion, it was much higher than the net revenue of the Oil and Gas industry that’s hovering around US$500million. Realising the growing importance of services trade in foreign exchange earnings, job-creation and GDP growth, the Ghana Export Promotion Authority (GEPA) under the Ministry of Trade and Industry and with support of the Commonwealth Secretariat has developed a National Services Export Strategy, Banda Zakari Abdallah, Head of Services, GEPA, has said. The goal of the strategy is to enhance the competitiveness of Ghana through improving the export of professional services. The strategic plan covers a period of five years and identifies four strategic sectors of focus for development and promotion. These are medical tourism, education, Business Processing Outsourcing (BPO) and Consultancy Services. He was speaking at an awareness-creation workshop in Sunyani under theme “A Major Contributor to Economic Growth”. The workshop was one of the three non-mutually exclusive programmes (awarenessraising, identification and removal of constraints) to achieve services export agenda. Foreign Bids Oil Extends Slide on Saudi Price Cut as U.S. Supply Seen Rising Source: Bloomberg News West Texas Intermediate extended losses from the lowest closing price since June 2012 as Saudi Arabia cut prices for crude exports to U.S. customers amid speculation that stockpiles increased. Brent fell in London. Futures dropped as much as 1 percent in New York for a fourth day of declines. Saudi Arabian Oil Co. reduced December differentials for all grades it ships to the U.S., while supplies to Asia and Europe were priced higher, an e-mailed statement showed yesterday. U.S. crude inventories climbed by 1.9 million barrels last week to a four-month high, according to a Bloomberg News survey before government data tomorrow. Oil slid in October by the most since May 2012 as leading members of the Organization of Petroleum Exporting Countries resisted calls to cut output. Global supplies are rising, with the U.S. pumping at the fastest pace in more than three decades. “It’s now a game of chicken between OPEC members and the U.S. to fight for market share” in the world’s biggest oil-consuming nation, Will Yun, a commodities analyst at Hyundai Futures Co. in Seoul, said by phone today. “Expanding crude stockpiles in the U.S. won’t be enough to make OPEC cut its output unless prices significantly drop to below $75.” WTI for December delivery decreased as much as 76 cents to $78.02 a barrel in electronic trading on the New York Mercantile Exchange and was at $78.24 at 3:18 p.m. Seoul time. Gold Trades near Lowest Level Since 2010 on Dollar’s Strength Source: Bloomberg News Gold held near the lowest since 2010 on expectations the Federal Reserve is preparing to raise interest rates while other central banks add stimulus, boosting the dollar and hurting bullion demand. Silver headed for the longest slump this year and platinum sank to a one-month low. Bullion for immediate delivery traded at $1,168.17 an ounce at 2:58 p.m. in Singapore from $1,165.63 yesterday, according to Bloomberg generic pricing. The metal dropped on Oct. 31 to $1,161.35, the lowest price since July 2010, and a fifth day of losses today would be the longest run of declines since August. Gold is heading for the first back-to-back annual retreat since 2000 as the Bloomberg Dollar Spot Index holds near a five-year high. The European Central Bank sets policy on Oct. 6 after the Bank of Japan unexpectedly added to stimulus last week. The Fed is moving closer to its first rate increase in eight years after ending a bond-buying program on schedule last month. “Gold is expected to remain weak as there is potential for further easing in Europe, which will continue to lend strength to the dollar,” said Zhu Runyu, an analyst at CITIC Futures Co., a unit of China’s biggest listed brokerage. “There is little buying interest as people are hoping prices will fall further before entering.” The Fed highlighted “solid” job gains and a falling unemployment rate in its statement on Oct. 29, while pledging to maintain borrowing costs at a record low for a “considerable time.” Market Information Treasury Bill Rate Monday 3rd November, 2014 to Friday 7th November, 2014 Previous Rates Period Discount Rates Interest Rates Weekly Rate Change 91 - Day 25.7544% 24.2377% 25.8011% 0.0467% 182 - Day 26.4079% 23.3145% 26.3910% 0.0169% 1 – Yr. Note 22.5000% -% 22.5000% -% 2 – Yr. Fixed Rate Note 23.0000% -% 23.0000% -% Source: Bank of Ghana Bank of Ghana Indicative Rate Tuesday 4th November, 2014 Currency Pairs Code Buying Selling U.S Dollar USDGHS 3.1947 3.1973 Pound Sterling GBPGHS 5.1032 5.1086 Swiss Franc CHFGHS 3.3086 3.3111 Australian Dollar AUDGHS 2.7792 2.7832 Canadian Dollar CADGHS 2.8254 2.8264 Danish Kroner DKKGHS 0.5358 0.5361 Japanese Yen JPYGHS 0.0280 0.0281 New Zealand Dollar NZDGHS 2.4659 2.4695 Norwegian Kroner NOKGHS 0.4705 0.4706 Swedish Kroner SEKGHS 0.4320 0.4323 S/African Rand ZARGHS 0.2872 0.2873 Euro EURGHS 3.9881 3.9914 Chinese Reminbi CNYGHS 0.5221 0.5225 BCEAO GHSXOF 164.34 164.48 Dalasi GHSGMD 13.47 13.49 Ouguiya GHSMRO 91.60 91.68 Naira GHSNGN 51.80 51.85 Leone GHSSLL 1372.48 1373.59 WAUA WAUGHS 0.1459 0.1459 Source: Bank of Ghana in GSE Summary GSE STOCK INDICES GSE-CI GSE-FSI Previous 31/10/2014 2,249.27 2,192.90 Current 3/11/2014 2,235.23 2,175.60 14.1 24.68 4.20% 21.77% CYTD 01/01/14 -3/11/2014 Source: Ghana Stock Exchange The GSE-Composite Index (GSE –CI), the benchmark measure of performance of the Ghana Stock Exchange gained 14.1 points from 2,249.27 to close at 2,235.23, representing a year-todate gain of 4.20%. The GSE-Financial Stocks (GSE-FSI), which tracks the performance of listed financial stocks, also gained 24.68 points from 2,192.90 to close at 2,175.60 representing a year-to-date gain of 21.77%. COMMODITY FUTURES Commodity Price % Change $83.59 -1.40% $1,165.02 -0.05% CORN /BU $371.75 -0.47% SUGAR /MT $429.10 +6.00% COCOA /MT $2,856.00 -1.28% CRUDE OIL (BRENT) GOLD T/OZ Source: Bloomberg Investment Funds Unit Trust and Mutual Funds Liberty Freedom Fund as at 16/10/14 Offer GHC 0.2096 Bid GHC 0.2075 Year to Date 15.67% SAS Fortune Fund as at 31/10/14 Price GHC 0.4848 Price Change GHC 0.0003 Year To Date 11.32% HFC Equity Fund as at 31/10/14 Price GHC 0.4135 Price Change GHC 0.0019 Year To Date 3.79% HFC Unit Trust as at 31/10/14 Offer GHC 0.2580 Bid GHC 0.2606 Year To Date 17.81% HFC REIT as at 31/10/14 Offer GHC 1.8143 Bid GHC 1.8326 Year To Date 16.79% SDC Campus Mutual Fund as at 12/02/14 Bid Price GHC 0.4229 Offer Price GHC 0.0108 Year To Date 4.43% BFund as at 31/10/14 Bid Price GHC 0.3359 Offer Price GHC 0.3393 Year To Date 12.23% Source: Business Ghana Inspirational quote A man has to learn that he cannot command things, but that he can command himself; that he cannot coerce the wills of others, but that he can mold and master his own will: and things serve him who serves Truth; people seek guidance of him who is master of himself. James Allen Thank you.