Ghana’s economy slowed in the 1^st quarter of 2019

Economic activities took a nosedive in the 1^st quarter of 2019 as contributions from the oil and gas production continue to dissipate in recent times. At the close of the 1^st quarter of 2019, GDP dropped to 6.7 percent from the 6.8 percent recorded in the 4^th quarter of 2018 but outpaced the 5.4 percent recording a year ago.

Growth in the industry sector continued to surge compared to the remaining sectors albeit moderately. The year-on-year growth of the industry sector stood at 8.4 percent in the 1^st quarter of 2019 with the Mining & Quarrying sub-sector being the fastest growing sector with a growth rate of 20.9 percent. Services sector followed with a year-on-year growth rate of 7.2 percent with the Information & Communication sub-sector topping the sub-sector with a growth of 37.0 percent. The agricultural sector was the slowest growing sector dropping from 4.4 percent in the 4^th quarter of 2019 to 2.2 percent in the 1^st quarter of 2019.

The services sector recorded the largest contributor to GDP, it contributed to 47.2 percent in the 1^st quarter of 2019, this was followed by the industry sector which contributed 33.1 percent to GDP and the agricultural sector having 19.7 percent to GDP.

Source: BOG; MOFEP; GSS.     * represents provisional estimate

Government of Ghana Treasury Securities

NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rates witnessed mixed adjustment with the yield on the 91-Day T-Bill rising by a basis points to settle at 14.77 percent. The yield on the 182-Day T-Bill however, edged down by a basis points to settle at 15.23 percent. Interest rates on the 364-Day T-Bill and other treasury notes and bonds were left unchanged.

An amount of GHS741.57 million was raised by Government, after accepting all bids tendered.  This however, fell below the GHS934.00 million targets expected to be raised in the week under review. The 91-Day T-Bill dominated Government’s purchase constituting 81.01 percent of the overall accepted bids. In the upcoming week, Government hope to raise GHS875.00 million bids through the issuance of the 91-Day, 182-Day and 364-Day T-Bills.

At the close of the auction, the yield curve sustained its normality despite the mixed adjustment recorded on the short-dated treasury securities. Interest rate is expected to drop further on the back of improved investor and market confidence as well as policy signals by the central bank aimed at trimming interest rates on the short-dated treasury securities.  

Ghana Stock Exchange

The equity market drove further southwards after the week’s trading activities as market sentiments waned amid continued selling pressures from some energy and financial sector stocks. At the closing bell, the GSE Composite Index dipped by 0.75 percent to settle at 2,383.88 points, representing a year-to-date loss of 7.32 percent. The GSE Financial Stocks Index also eased by 1.10 percent to settle at 2,054.42 points, reflecting a negative year-to-date return of 4.61 percent.

Market outturn was significantly below figures obtained from the previous week’s trading session. A total volume of 657,670 shares valued at GHS1.50 million exchanged hands, corresponding to 80.98 percent decline from the previous week’s outturn. SIC Ltd, CPC Ltd and MTN were the most actively traded stocks as they jointly accounted for 55.77 percent of the overall traded volume. The market capitalization also dropped by 0.65 percent to settle at GHS58,421.12 million. 

Stock Price Movements

Thirteen equities recorded price changes after the week’s trades. GCB Bank Ltd upped its share price by 41 pesewas to trade at GHS5.00 per share. CAL Bank Ltd surged by 13 pesewas to close trading at 93 pesewas per share. The Republic Bank (Ghana) Ltd and Starwin Products Ltd also had their share prices rising by 2 pesewas and a pesewa to trade at 65 pesewas and 4 pesewas per share respectively.

Heavy selloffs were witnessed in three financial stocks and a consumable stock as they trimmed their share prices in excess of 15 pesewas. Standard Chartered Bank Ltd dropped by GHS1.14 to close the week at GHS20.50 per share respectively. Access Bank Ghana Ltd and Ecobank Ghana also went down by 40 pesewas and 18 pesewas to settle at GHS3.00 and GHS7.82 per share respectively. Fan Milk Ltd shed 50 pesewas of its opening price to close trading at GHS6.50 per share. Total Petroleum Ltd, Enterprise Group Ltd, SIC Ltd, ETI and Benso Oil Palm Plantation Ltd also posted marginal losses in the week’s trade.

Currency Market

Source: Bank of Ghana 21.06.19

The Ghana cedi lost its shine on the interbank currency market as it failed to take advantage of the daunting outlook of some major trading currencies. The US dollar dipped against major peers on the international currency market as dovish monetary policy stance and interest rate cut signals by US Fed affected the market. This policy stance measure with the overarching objective of tackling the rising trade tensions and dwindling inflation outlook in the world’s largest economy sparked some scepticism among investors. Also, the growing disbelief in the tendency of the US and China Governments striking an agreement ahead of the G20 meeting to ease trade war weighed on the greenback. Despite the dollar’s weakness on the international currency market, it recorded a week-on-week appreciation of 0.23 percent as it traded at GHS5.26 on the interbank currency market last Friday. The year-to-date depreciation of the cedi/dollar thus rose to 8.23 percent.

The British pound tumbled in the week under review, weighed by growing political and economic uncertainties in the UK. The political uncertainties arising from Boris Johnson wining the 2^nd round of votes, in the race to replace Theresa May clouded the market with uncertainties of the high possibility of leaving the eurozone with no favorable trade deal. The decision by the Bank of England keeping its interest rates unchanged at 0.75 percent but trimming UK’s growth forecasts for the second quarter to zero percent also contributed to losses of the pound on the international currency market. Despite the pound’s dimming look on the global forex market, it traded 7 pesewas higher at GHS6.68 on the interbank currency market, corresponding to a week-on-week appreciation of 1.07 percent. The year-to-date depreciation of the cedi/pound thus widened to 7.59 percent.

The Euro supported by upbeat PMI data from the eurozone overturned previous week’s losses against the Cedi. In the week under review, Eurozone’s manufacturing PMI rose to 47.8 in June against May’s figure of 47.7 to offer positive sentiment to the market. Also, data from the services came much stronger than expected with PMI rising to 53.4 in June from a previous figure of 52.9 representing the highest rise in seven months. Other upbeat data were Germany’s Manufacturing PMI which settled at 45.4 points in June, up from 44.3 in May to offer support to the single currency. The Euro thus added 8 pesewas to trade at GHS5.96 last Friday with the year-to-date depreciation of the cedi rising to 7.45 percent.

International Markets

Market activities closed bullish on the US Wallstreet with the two main benchmark indices posting one of their best weekly gains since the beginning of 2019. Supported by the market excitement associated with the imminent plan by the US and China to address the long-standing trade dispute and the rate cut signals by the US Fed buoyed risk-taking sentiment. The S&P 500 jumped by 2.20 percent to end the trading week at an index level of 2,950.46 points. The Dow Jones Industrial Average also rose by 2.41 percent to finish the week’s trade at 26,719.13 points.

Trading on the London Stocks Exchange closed bullish spurred by high demand from international investors who took advantage of the daunting outlook of the British pound to increase their shareholdings. The upward drive of the FTSE 100 index was also supported by recent economic stimulus measures adopted by the Bank of England and other policy directions to mitigate the impact of the Brexit. The FTSE 100 thus posted a weekly gain of 0.84 percent to settle at 7,4073.50 points. 

The Japanese Stock Exchange posted another round of weekly gain as the upcoming US and China talk and rising hopes for interest rate cuts by central banks of Advanced economies improved stock demand. The Nikkei 225 saw a weekly rise of 0.67 percent to settle at 21,258.64 points.

On the African equity market, the Johannesburg All Share Index climbed further with 1.28 percent gain to end the week at an index level of 58,941.47 points. The Nigerian All Share Index, however, dropped by 0.65 percent to settle at 29,851.29 points. The Nairobi All Share Index also recorded a weekly loss of 1.85 percent to close at 147.35 points.

Source:www.bloomberg.com, & www.investing.com

Crude oil hit a three-week high following the escalating tension between the US and Iran as the latter strike a US surveillance drone. This was met with threat from Trump, negatively affecting supply of the energy commodity onto the commodities market. Also, the growing expectation for an extension of the 1.2 million per barrel cut in daily production supported the bullish closure of the blackgold. Brent crude oil thus rose by $3.13 to trade at $65.14 per barrel.

Gold posted a positive weekly gain as growing tension in the Middle East and speculation of an interest rate cut in the US boosted the demand for the yellow metal. These and depreciation of the US dollar on the international market propelled the value of the gold as it became relatively less expensive for non-dollar holders. Gold added $59.05 to trade at $1,399.15 per ounce.

Cocoa struggled to hold onto its gains even after a stakeholder meeting in Ghana to set a minimum pricing of the soft crop in view of protecting farmers. The marginally loss of the soft crop was due to favourable climatic conditions in Ivory Coast inducing more production which negatively affected the pricing of the soft crop. Cocoa thus shed $1.00 to trade at $2,501.00 per metric tonne.

Coffee posted a strong gain as it rose to a one week high on technical correction of the market and significant support from the Brazilian real as it gained footing. Coffee thus advanced by 5 cents to close the trading week at $1.01 per pound.

Note: The data in this publication is Friday on Friday (w/w)