Weekly Highlights

• Producer Price Inflation dropped further to 9.0 percent.
• Interest rates on 91-Day and 182-Day T-Bills upped last Friday.
• GSE drove further southwards.
• The Cedi sustained a year-to-date appreciation against the British pound.
• Brent crude oil dropped as rising infection cases dimmed demand outlook.
• Global equity market closed bearish as Covid-19 infection rises.

Macroeconomic Update

Producer Price Inflation dropped further to 9.0 percent

Producer Price Inflation sustained a downtrend in the month of August as it settled at 9.0 percent from a previous rate of 9.30 percent. The moderation recorded in the month of August is attributed to the easing of inflation pressures at Manufacturing and Mining & Quarrying sub-sectors and resumption in industrial activities after the easing of the COVID-19 restrictions. The PPI for the Manufacturing sector trimmed by 40 basis points to 4 percent in August whereas that of the Mining & Quarry sub-sector dropped by 30 basis points to end the month at 37.9 percent. The Utility sub-sector was, however, unchanged in the month of August at 5.8 percent.

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 10.50
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 9.00
Monetary Policy Rate (%) 20.0 17.0 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 4.9 Q1
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 4.7 6.3
Public Debt (% of GDP) 69.8 57.6 63.00 n/a 67
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 4.3
Source: BOG; MOFEP; GSS. * represents provisional estimate

Government of Ghana Treasury Securities

Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Sep 28 – Oct 2 14.04 14.15 16.99 18.25 19.00 19.25
Sep 21 – 25 14.01 14.12 16.99 18.25 19.00 19.25
Sep 14 – 18 14.02 14.09 16.91 18.25 18.85 19.25
2020 Yr. Open 14.70 15.15 17.90 20.95 19.70 19.50
NB: The above are the annual yields on Government of Ghana Treasury Securities.

The yield on the Government of Ghana treasury securities were marginally adjusted in the week-under-review. Yield on the 91-Day T-Bill upped by 3 basis points to settle at 14.04 percent. The 182-Day T-Bill also increased by 3 basis points to close at 14.15 percent but that on the 364-Day T-Bill remained unchanged at 16.99 percent. That on the other treasury securities were also unaltered after the week’s auction as they were not scheduled for the week’s auction.

Results of Auction held on 25th September, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 730.70 730.70 14.0357
182-Day T-Bill 95.32 95.32 14.1478

Government of Ghana accepted all the GHS826.02 million bids tendered by investors at the auction. The amount raised was surpassed the GHS735.00 million target slated for the week’s auction. The 91-Day T-Bill was the most accepted bid by the government as it constituted 88.46 percent of the overall bids raised. At the upcoming auction, an amount of GHS712.00million is targeted to be raised at the upcoming auction from the sale of the 91-Day, 182-Day, and 364-Day T-Bills.

The term structure of the Government of Ghana treasury securities sustained its normality as the rate adjustment observed at the week’s auction was marginal. The continued risk aversion of investors coupled with rising demand for Funds by Government also contributed to the sustenance of the yield curve.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2016 2017 2018 2019 2020
GSE-CI -15.33 52.73 -0.29 -12.25 -18.73
GSE-FSI -19.93 49.51 -6.79 -6.23 -17.97

The Ghana Stocks Exchange drove further southwards on account of the persisting selling pressures in some blue-chip stocks on the bourse. The GSE-Composite Index tumbled by 37 basis points to settle at 1,834.47 points, representing a year-to-date loss of 18.73 percent. The GSE Financial Stocks Index also recorded a week-on-week decline of 75 percent as it settles at 1,656.71 points last Friday. The year-to-date loss of the index thus widen to 17.97 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 1.71 6.51 281.93
Total Value Traded (GHS M) 2.97 3.97 33.81
Market Cap (GHS M) 53,165.81 52,927.83 -0.45

Market outturn improved significantly in the week under review. A total of 6.51 million shares valued at GHS3.97 million exchanged hands as compared with the 1.71 million shares worth GHS2.97 million, which traded in the week ended 18th September 2020. MTN Ghana Ltd topped the activity chart in terms of traded volume, contributing 81.63 percent of the total shares traded in the week and dominated in terms of value with an amount of GHS3.19 million. The GSE market capitalization, however, fell on account of the selloffs by 0.45 percent to settle at GHS52,927.83 million.

Stock Price Movements

A total of two stocks appeared on the mover’s list with one advancer and a laggard. Standard Chartered Bank Ltd gained 2 pesewas to trade at GHS13.55 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
SCB 18.40 13.53 13.55 0.02 0.15%

Ecobank Transnational Incorporated on the other hand, shed a pesewa to end the week’s trade at 6 pesewas per share.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
ETI 0.08 0.07 0.06 -0.01 -14.29%

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.6991 5.7049 CAD 4.2508 4.2549
GBP 7.2373 7.2452 CFA 98.9661 99.0542
EUR 6.6222 6.6281 JPY 0.0540 0.0540
AUD 3.9979 4.0030 ZAR 0.3323 0.3326
NGN 66.7310 67.1694 CNY 0.8346 0.8354
Source: Bank of Ghana 25.09.2020

On the interbank currency market, the Ghana cedi appreciated against the British Pound and the Euro but lost against the US dollar. The US Dollar jumped to a five-month high as economic uncertainties in the US amid escalating unemployment cases sparked investor’s flight for safety. The IHS Markit Composite PMI Index in US slumped from 54.6 in August to 54.4 in September. Unemployment benefits for the week ended September 19 surged by 4,000 to close at a seasonally adjusted 870,000 from the 866,000 recorded in the previous week. Following the greenback’s outturn, it posted a week-on-week gain of 0.03 percent to trade at GHS5.70 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 2.95 percent.

The British Pound eased to a two-month low on account of the imposition of a new lockdown restriction and a scale-down in covid-19 relief packages. British Prime Minister-Boris Johnson announced a new lockdown measures that included closure of pubs, restaurants, and restrictions on retailer shops to help subdue a second wave of covid-19 infection. Furthermore, government ditched its current furlough scheme that supported employees in favour of a less generous wage-support scheme that focuses on tackling the broader macro-economic instability. The Pound succumbed to these developments as it recorded a week-on-week depreciation of 1.95 percent on the interbank currency market to exchange at GHS7.25. The Ghana cedi thus posted a year-to-date appreciation of 1.04 percent.

The Euro sank lower following the release of a string of downbeat economic data, which weighed on investor’s outlook on the bloc. Economic recovery in the region hit a snag as the Eurozone’s IHS services Purchasing Managers’ Index dipped from 51.9 points in August to 47.6 points in September, driven by lockdown measures in some member states. Germany’s IFO business-climate index also settled at 93.4 points in September, slightly lower than the projected upturn of 93.5 points. The Euro thus depreciated by 1.99 percent on the interbank forex market to sell at GHS6.63. The year-to-date depreciation of the cedi thus narrowed to 6.26 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,319.47 3,298.46 -0.63 2.09
DJIA 27,657.42 27,173.96 -1.75 -4.78
FTSE 100 6,007.05 5,842.67 -2.74 -22.54
NIKKEI 225 23,360.30 23,204.62 -0.67 -1.91
FTSE/JSE All Share 54,673.65 53,587.11 -1.99 -6.13
NSE All Share 25,572.57 26,319.47 2.92 -1.95
Nairobi All Share 140.24 140.37 0.09 -15.65

Wallstreet ended bearish, recording its fourth straight decline last Friday due to continued resurgence of the US dollar as investors flew for safety, amidst the rising cases of COVID-19 in the US and European countries. Financial, technological and energy sector stocks were the most affected stocks on the bourse. The S&P 500 thus went down by 0.63 percent to settle at 3,298.46 points. The Dow Jones Industrial Average also went down by 1.75 percent to settle at 27,173.96 points.

The London Stocks Exchange closed in the red following uncertainties about the prospects of the UK economy, amidst the rise in COVID-19 cases and Brexit uncertainties. The down drive of the index was further spurred by the decision of management of the bourse to trim jobs by 250 to save £30m. The FTSE 100 thus dipped by 2.74 percent to settle at 5,842.67 points with the mining and commodities stocks recording the worst declines.

The Japanese Stocks Exchange posted a week-on-week decline as investors reacted to the impact of the rising infection cases in the US and European countries on their economy. The Nikkei 225 thus went down by 0.67 percent to settle at 23,204.62 points.

On the African equity market, the Nigerian All Share Index recorded a weekly gain of 2.92 percent as it closed at 26,319.47 points. The Nairobi All Share Index also upticked by 0.09 percent to settle at 140.37 points. The Johannesburg All Share Index, on the other, hand registered a weekly decline of 1.99 percent to settle at 53,587.11 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 43.15 41.92 -2.85 -36.48
Gold $/ounce 1,962.10 1,866.30 -4.88 22.53
Cocoa$/metric tonne 2,641.00 2,568.00 -2.76 1.10
Coffee $/pound 1.136 1.1365 0.04 -12.37
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil posted a weekly decline on the international commodities market on growing worries over rising Covid-19 cases, renewed lockdowns in some advanced economies and slowing economic recovery. High numbers of new infection cases in the US, the UK and some advanced economies sparked worry about its potential impact on global demand of the energy commodity. In the US, the four-week average demand of the energy commodity was about 9 percent below a year ago with similar happenings in China – the world’s largest consumer. These and indications that Libya plans to resume export in the coming days caused Brent crude oil to trim $1.23 of its opening price to end the week at $41.92 per barrel.

Gold was knocked down by fading hopes for the implementation of US Covid-19 stimulus package despite resurgence in new cases across the developed economies. The price decline of the yellow metal also stemmed from the resurgence of the dollar which negatively affected its attractiveness. Gold thus shed $95.80 to trade at $1,866.30 per ounce.

Cocoa tumbled on the international commodities market on improved climatic conditions resulting in bumper harvest in top grower Ivory Coast. Cocoa which went down by $73.00 to trade at $2,568.00 per metric tonne is anticipated to recover in the near term following the newly-adopted policy initiative by the Ivorian Government to improved processing by 14 percent as it outline plans in setting up two addition processing plants that has the capacity to mob up 100,000 tonnes of the beans.

Coffee recorded little change on the international commodities market despite report of improved production in Brazil and Vietnam. Data from Brazil indicated that export of the beans grew by 38 percent to 47.4 million bags for 2020, up from a previous estimate of 46 million bags. Coffee thus was unchanged to trade at $1.13 per pound.

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