Any Election Winner Is Better Than None for Ghana Investors

  • Indecisive result in presidential election may spur losses
  • Broad policy continuity seen in case of clear outcome

A woman votes at a polling booth as people wait in line in the Bole district, Ghana, on Dec. 7, 2016.

Photographer: Pius Utomi Ekpei/AFP via Getty Images

For backers of Ghana’s currency and bonds, it doesn’t matter who wins the presidential election. Just so long as someone does.

Early provisional results show President John Mahama and rival Nana Akufo-Addo neck and neck in the poll, with the latter claiming a marginal lead, according to results published on Citi FM’s website. The tightness of the contest is an echo of 2012, when an indecisive election led to a nine-month court battle that spurred a more than 10 percent drop in the currency and raised the yield on dollar debt about 120 basis points.

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If there’s a court battle to determine the winner, the currency may weaken as much as 8 percent and the yield on dollar debt could rise as much as 30 basis points by the end of the first quarter, said Gaimin Nonyane, a London-based senior macroeconomic specialist at Ecobank Transnational Inc. “Regardless of who takes up the administration, I’ll expect broad policy continuity.”

The cedi, which weakened as much as 4.7 percent on Wednesday, strengthened 0.6 percent to 4.2550 per dollar as of 2:45 p.m. in Accra. The yield on its dollar debt due August 2023 was little changed at 9.19 percent.

“The downside risk comes more from not who wins, but how they win,” said Kevin Daly, who helps oversee about $11 billion of emerging-market assets at Aberdeen Asset Management Plc in London, including Ghana Eurobonds due 2026 and 2030. The risk is that the process drags on, and the government turns away from the International Monetary Fund program, he said.

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