ghanaportfolio insightsRates

31 May 2021

Shifting gears into momentum

In brief

  • Strong data prints and impressive earnings from developed markets have restored some calm to investors broadly, but inflation and reflation fears linger.
  • Above-trend growth now remains the base case scenario for 2Q2021 for most banks and portfolio managers as vaccine rollout in 1Q2021 remained the key driver of optimism across developed economies.
  • We view Ghana’s growth prospects as far ahead of the curve as evidenced by the strong reading of the Real Composite Index of Economic Activity based on recent data from the Bank of Ghana.
  • Considering the gradual fading of foreign portfolio inflows in recent times, we have adjusted our earlier underweight view of the dollar to neutral.
  • We have pivoted towards a core-satellite strategy that involves crystallising gains on some of our short-dated papers whilst buying duration to magnify carry on our portfolio.
  • Based on our view on currency, we remain neutral on Ghana Eurobonds and view them as fairly priced at their 95-98+ levels although a 12.0% mispricing between Ghana Eurobonds and local bonds persists