2019 outlook good for bond investments

Setor Quashigah, Head of Wealth Management at Standard Chartered Bank

The 2019 global outlook for wealth management as assessed by Standard Chartered Bank, has projected a promising stance for bond investment assets with expected better positive returns as compared to the start of 2018.

Emerging market (EM) US Dollar government bonds such as Ghana’s Dollar denominated Euro Bonds are preferred owing to easing headwinds for EM assets, the attractive yields and the relative value on offer.

Emerging Market bonds are expected to outperform Development Market bonds.

The forecast from the latest market outlook report by Standard Chartered Bank Wealth Management Advisory, describes 2019 as a year to prepare and react as an investor.

The outlook projects an increasing value of bonds and cash, as investor are expected to dial back on risk assets, raising the allocations to cash.

The rationale is based on threefold events in the market. The first is that US cash yields have increased, both in absolute terms and relative to other asset classes once adjusted for volatility;  secondly, markets are expected to continue to be volatile in 2019; and thirdly there are indications that cash can be quickly deployed when short-term, tactical opportunities present themselves.

Global economic growth for 2019 is expected to be slow for the first time in three years with inflation remaining under control across the globe.

This year, Ghana’s government will issue sovereign bonds of up to US$3 billion of which proceeds of the issuance will be used to finance critical infrastructure projects and liability management.

Government is expected to explore the possibility and feasibility of issuing one or a combination of Eurobonds, Century, Green, Panda and Samurai bonds based on market conditions.

2018 GoG Bond Issuance

Last year, the global capital market experienced some turbulence during the first half, triggered by rising US interest rates, as well as currency crises in some emerging markets and developing economies, and aggressive sell-off of bonds by

Investors, among others.

Notwithstanding this turbulence on the global markets, Ghana issued US$2 billion in Eurobonds in May 2018, consisting of US$1 billion each of 10-year and 30-year instruments respectively. The 10-year bond was priced at 7.625 percent, while the 30-year bond was priced at 8.627 per cent.

Market Outlook

The 2019 market outlook is an annual research conducted by the Wealth Management department of Standard Chartered Bank to assess the investment climate for the year and predict the best options for portfolio investors.

Head of Wealth Management at Standard Chartered Bank Ghana, Setor Quashigah noted the report gives an insight into the best forms of investment and market products that will turn in good yields.

Predicting a stronger US dollar in the first few months of the year, given relative US economic performance, Quashigah advised financial market investors to diversify their investments in order to avoid the situation of locking up funds in tight equities on international stock markets.

By Joshua W. Amlanu