Secondary Market Action skyrocketed last week, marking a record high trade volume since the new bonds settlement. The total traded volumes leaped from GH¢117.11million to a staggering GH¢459.34million, showcasing a remarkable surge.
Increased trading activity observed in secondary markets due to resolving appraisal disputes
Market participants, who had been tangled up with valuation issues concerning the Payment In Kind (PIK) component of the new bonds, finally found a workaround, sparking an uptick in activity.
The bulk of trading activity concentrated on the new bonds, accounting for approximately GH¢398.63million; representing a massive 97.31 percent week-on-week rise. Trading mainly focused on short- to medium-term papers, with a special focus on the actively traded Feb-2027 (CPN: 8.35 percent) bond, closing at a yield of 9.26 percent. Additionally, the Feb-2028 (CPN: 8.50 percent) bond settled at 9.42 percent.
The active secondary market serves as a breath of fresh air for investors and market enthusiasts, who were anxiously waiting for resolution to the valuation conundrum.
Apakan Securities voiced optimism in their market analysis: "We anticipate the market to pick up as the valuation issues have been addressed". This mindset aligns with broader market expectations, as investors forecast a more lively secondary market in the foreseeable future. The robust trading volumes, combined with the excellent performance of short- to medium-term bonds, pinpoint a market primed for growth.
Apakan Securities' vision mirrors the overall market outlook, which is brimming with surging secondary market trading volumes and substantial activity in the primary market, particularly the oversubscription of Treasury bills.
Investor interest in government bills has been rekindled due to rising money market yields. Auction results from the preceding week highlighted an ongoing oversubscription of Treasury bills for the sixth consecutive week. Investors submitted an impressive GH¢2.57billion, overtaking the target size of GH¢1.83billion by 40 percent.
Government was able to sell enough Treasury bills to cover the maturing face value (FV) of GH¢1.75billion across all the bills. Notably, the 91-day bill observed a 31-basis-point increase, reaching 20.26 percent; while the 182-day bill rose by 12 basis points to 22.83 percent. Similarly, the 364-day bill inched up by 10 basis points to 27.36 percent.
In the upcoming week, government aims to raise GH¢3.33billion through the same range of bills, with GH¢2.31billion in maturing FV due next week. The differential between the target size and the maturing value stands at GHÇ1.03-billion, hinting at increased financing needs by the government in the money market. As a result, analysts presume that yields on Treasury bills will continue to rise in the upcoming auction, enabling the government to meet its financial targets.
Market Perspective
The current market landscape in Ghana is characterized by a surge in secondary market trading volumes and robust activity in the primary market, particularly the oversubscription of Treasury bills.
The recent surge in demand for Treasury bills and the active secondary market reflect growing investor optimism regarding Ghana's economic prospects, resulting in a positive outlook for new listings and market expansion.
Economic Context
Evidently, investor confidence is growing. The Ghana Stock Exchange (GSE) has recorded a 30% increase in its main index for the initial quarter of 2025, making it the leading stock market in West Africa. This growth is attributed to the revival of investor confidence and the vigor of market activities[2][3][4].
Additionally, the financial stock index witnessed a 33% increase, demonstrating strong investor engagement and action in the financial sector[3][4]. The GSE market capitalization surpassed GH¢143 billion as of May 18, 2025, marking a more than 70% year-on-year increase[3][4]. The market shows remarkable promise, withumerous new listings and enhancesments anticipated.
Justifying this investor enthusiasm, Ghana recently underwent an upgrade to 'B-' by Fitch, accompanied by a stable outlook. This upgrade underscores reduced liquidity risks and a stable interest/revenue ratio[1]. Upon embracing sound fiscal management practices, Ghana's economy has been steadily recovering.
Outlook
Under the current trends, prospects for both secondary and primary markets appear bright in Ghana. Continued investor confidence will likely propel further growth, driving new listings and heightened market activity. However, sustaining this momentum necessitates maintaining economic stability and inviting more domestic and foreign funding.
- The robust growth in the secondary market, signified by the significant increase in trade volumes, suggests a positive outlook for the analysis of market development.
- The remarkable surge in secondary market trading volumes and the strong performance of short- to medium-term bonds indicate a potential report on market growth and financing trends in the finance and banking-and-insurance industry.
- The active secondary market, the surge in demand for Treasury bills, and the positive outlook for new listings and market expansion are indicators of an industry ripe for growth and expansion, especially in the market sector.
- The Fitch rating agency's upgrade of Ghana to 'B-' with a stable outlook and the 30% increase in the Ghana Stock Exchange's main index underscore the positive impact of sound fiscal management practices on financial and market growth.
- In order to sustain this momentum and drive further growth in the secondary and primary markets, it is crucial to maintain economic stability, invite more domestic and foreign investments, and continue implementing effective financial policies, as reflected in the business sector's overall outlook.
