CIO Memoportfolio insights

14 April 2020

Nobody Knows

In brief

  • We entered 2020 with more concerns than optimism. Our opinion was not based on foreknowledge about the Coronavirus, but rather in response to the hurdle investors face this year- trade tensions, the slow down in global economic growth and mounting debt levels in Ghana. These underlying challenges have been compounded with the impact of the COVID-19 on the global economy
  • The minister of finance projects that Ghana will lose over GHS 9.0bn in revenue as a result of the COVID-19. Consequently, the country has secured a USD 1.0bn loan facility from the IMF to help address fiscal and balance of payment needs.
  • In a bid to improve liquidity in the market, the Bank of Ghana has cut the monetary policy rate to 14.5% from 16% while reducing the primary reserve by 2%. On the other hand, the fiscal desk has focused on fighting COVID-19 while providing stimulus packages to businesses and households.
  • However, the effectiveness of monetary and fiscal policy depends on the ability of our medical experts to control the spread of the virus.
  • In a period like this where the future is unknowable, the nerves of investors will be tested. However, at this moment the risk of missing out on investing opportunities is higher than the risk of losing money.
  • Our focus during this period is three-fold; increase allocation to near-cash assets, seek currency protection and add stocks that can withstand six or twelve months of revenue disappointment.