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WEEKLY INTELLIGENCE REPORT  

Comments:

  • As we reach the last quarter of the financial year, the markets have remained relatively unchanged on balance from the pace at which the year commenced;
  • On the other hand, the less than salutary performance of companies quoted on the exchange could indicate that the bottom has not been reached yet;
  • The market may however be waiting for the banks’ audited results at the end of the year to help decide the balance of their portfolios.

GLOBAL ECONOMY

Developments on the international market remained mixed in the week under review.

  • On the strength of emerging data, Ghana was set for its first rate cut in three years. With inflation rate falling to 18.37% in September from 19.65% in August, the third consecutive decline, the Bank of Ghana kept its key lending rate steady at 18.5% (a rate it has held since February 2009).
  • Last week the Bank of England (BOE) held interest rates at a record low (0.5%) for the seventh consecutive month. Estimates released by the Centre for Economics and Business Research (CEBR) (a UK‐based think‐tank) last week, were for the UK economy to grow by 1.3% in 2010 ― having shrunk by 4.3% this year. The report estimates that the:
    1. BOE’s policy rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014;
    2. Sterling will weaken further, falling to US$1.40 and "possibly" below 1 euro by 2011.
  • Russian authorities estimated that the economy will shrink by 7.5% in 2009, while claiming that intervention by the Kremlin had prevented a worse decline.

Oil Prices Nudge New Heights

On the back of better-than-expected U.S. corporate earnings (reported last week) oil prices touched a US$80pb high last week. Despite the boost to investor confidence from the US results, the dollar fell against other major currencies. Investors have continued to rebalance their portfolios away from dollar-denominated assets in favour of stocks and commodities, as the U.S. Federal Reserve kept interest rates at near zero per cent. Meanwhile reports emerged during the week that member states of the Organisation of Petroleum Exporting Countries (OPEC) may increase their output targets when the group meets in Luanda, Angola on December 22, in response to the rise in crude prices at the international market.

Comments:

  • Despite apparent OPEC enthusiasm it is noteworthy that crude demand has remained sluggish this year as the global economy recovers from recession; and
  • The current spike in prices may be dampened by OPEC spare capacity of about six million barrels and massive on‐ and offshore stocks of crude.

Chinese GDP Hits New High

Reports released by the Chinese government last week indicated that buoyed by massive government spending, output grew by 8.9% (year‐on‐year) in the third quarter from 7.9% in the previous quarter. This is the fastest GDP growth by the Chinese economy since Q3 last year.

Comment:

A pick-up in China’s domestic demand has been cited as a major ingredient in the oil price rally.

Global Economy Round Up
  • US technology giant, Apple’s, quarterly profits released during the week indicated a 47% increase year on year to US$1.7 billion.
  • IBM’s profits rose, by 14% to US$3.2 billion.
  • Google’s (at US$1.6 billion) by 27% year on year.
  • Yahoo!’s net income was up by 242% year on year to US$186 million on the back of falling revenue.
  • Cadbury, a British sweets manufacturer targeted for takeover by Kraft Foods of America, reported third‐quarter sales growth of 7%.
  • Deutsche Bank, Germany’s biggest bank, announced net quarterly profits of €1.3 billion (US$2.1 billion).
  • eBay, America’s online auction giant saw profits fall by 29% to US$350m (£211m) in the third quarter from US$492m in the same period a year earlier.