Weekly Highlights

• Ghana’s economy to rebound in 2021
• Producer Price Inflation jumped to 10.3 percent.
• Yields moderated further, 3-Year Bond losses 155 basis points at the recently held auction.
• GSE tumbled, benchmark composite index recorded first decline since January 2021.
• Ghana cedi recorded week-on-week depreciation versus the US dollar as Fed left policy rates unchanged.
• US equity market tumbled as falling yields affected banking sector stocks.
• Brent crude oil falls as COVID-19 pandemic infections rekindled in some parts of Europe.

Macroeconomic update

Ghana’s economy to rebound in 2021
Ghana’s economy is tipped to recover in 2021. Economic growth is projected to end the year 2021 at 5 percent, following measures adopted by the Government to revive economic activities, whiles raising adequate funds to support projects and programmes. Five priority areas have been outlined by the Government of Ghana in fulfilling this vision of economic recovery in 2021. These are containing the COVID-19 pandemic spread; the creation of jobs; supporting entrepreneurship development; adequate provision of security and finally improving the fiscal space.

Government expenses for 2021 is pegged at GHS113,750 million and this is to cover all activities and programmes needed for the economic restoration agenda set by the Government. The estimated amount represents 13.9 percent rise over the 2020 outturn of GHS99,844.00 million. This further corresponds to 26.2 percent of GDP. Despite this, capital expenditure is one of the least expenditure items in the 2021 budget statement. This could deride the commitment to restore economic growth in 2021 considering the needed investment requirement by Government. A total of GHS11,423.00 million is allocated for capital expenditure, as compared to the GHS35,864 million allocated for interest payments and the GHS30,314.00 million allocated for wages and compensations of Government workers.

Government’s revenue target for 2021 is set at GHS72,452.00 million and is expected to be raised from various sources. Domestic revenue mobilisation component is estimated at GHS70,987.00 million, representing 32.2 percent increment over 2020’s outturn. The remaining amount of GHS1,465.00 million is expected to be raised from external sources. Out of the Domestic Revenue mobilisation amount of GHS70,897.00 million, non-oil tax revenue is estimated at GHS70,987.00 million, representing 75.6 percent.

Revenue mobilisation measures as outlined in the budget statement includes, COVID-19 pandemic levy of 2 percent – One (1) percentage point increment in the National Health Insurance Levy and the other one (1) percent raised from increment in the value added tax (VAT) rate. Sanitation levy of 10 pesewas levied on petroleum products under the Energy Sector Levies ACT(ESLA). An ESLA levy of 20 pesewas on every litre of fuel. This is to support stability in the power sector. A financial sector clean-up levy of 5 percent on profit-before-tax is also proposed by the Government as means of defraying the cost associated with the banking and financial sector clean-up. In addition to this, Government is also considering raising revenue from the gaming industry, in addition to reviewing road tolls to reflect current market prices.

In the bid to aid in the restoration of economic growth, the Ghana cares Obaatanpa programme of GHS100 billion is to be implemented. The programme, which encapsulates several activities, is aimed at supporting local industries to harness new opportunities and safeguard the economy from further shocks, whilst providing import substitutions to address the prolong over dependence on importations, among others.

On the fiscal front, the Government anticipates reverting to the fiscal responsibility Act threshold of a single fiscal deficit in the medium term, as it sets a target of 9.5 percent for 2021 with consistent moderation to 4.5 percent by 2024.

Producer Price Inflation jumped to 10.3 percent
The producer price inflation for the month of February 2021, upped by 120 basis points to 10.30 percent. The upsurged in the index followed higher input cost within the manufacturing sub-sector of the economy. The sector, which constitutes about two-third of Ghana’s Industry size, had cost of production increasing by 2.9 percentage point to 9.8 percent in February 2021. The Producer Price Inflation for Mining and Quarrying sub-sectors, however, moderated by 3.2 percentage point to settle at 24.2 percent in February 2021. The PPI at the utilities sub-sector, was however, unchanged for the third straight month at 0.2 percent. The 1-year trend analysis is presented below.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8.00 9.90
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 10.3
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 14.50
GDP Growth (y-o-y %) 6.3 6.5 0.9* 5.00 n/a
Budget Deficit (% of GDP 3.8 4.5Sep 11.7 9.50 n/a
Public Debt (% of GDP) 57.6 63.00 68.3 n/a n/a
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 n/a
Source: BOG; MOFEP; GSS. * represents provisional estimate ** data yet to be released by MoF

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Mar 22 – 26 12.90 13.66 16.67 17.60 17.70 18.30
Mar 15 – 19 13.00 13.85 16.67 17.60 19.25 18.30
Mar 08 – 12 13.05 13.86 16.76 17.60 19.25 18.30
2021 Yr. Open 14.09 14.12 17.00 18.50 19.25 19.85
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Yields on the 91-Day and 182-Day moderated marginally at the recently held auction. The Interest rate on the 91-Day T-Bill dropped by 10 basis points to settle at 12.90 percent. The 182-Day T-Bill also eased by 19 basis points to settle at 13.66 percent. The yield on the 3-Year Bond also moderated by 155 basis points to settle at 17.70 percent. The yields on the 364-Day T-Bill was unchanged at 16.67 percent, as it was not part of the week’s issuance. Interest rates on the Government of Ghana treasury Notes and Bonds were also unchanged.

Results of Auction held on 19th March, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 983.72 983.72 12.8962
182-Day T-Bill 135.42 135.42 13.6573
3-Year Bond 1,610.11 1610.11 17.7000

At the week’s auction, Government accepted all the GHS1,119.14 million bids tendered by investors. The amount raised outstripped the week’s target of GHS890.00 million. Government also raised GHS1,610.11 from the issuance of the 3-Year Bond at a reduce coupon rate of 17.70 percent. This brings total bids accepted by Government in the week’s trade to GHS2,729.25 million, as compared to the GHS1,484.25 million raised at the previous auction. An amount of GHS1,342.00 million is scheduled to be raised next Friday from the sale of the 91-Day, and 182-Day and 364-Days T-Bills.

The yield curve sustained its normality and had its curve smoothened following the rate moderation recorded on the 3-Year Bond. The consistent decline in rates in recent times is tipped to influence rate policy rate cut, despite a rising inflation and public debt. A policy cut is expected to trigger private sector penetration as cost of capital is anticipated to decline.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2017 2018 2019 2020 2021
GSE-CI 52.73 -0.29 -12.25 -13.98 13.06
GSE-FSI 49.51 -6.79 -6.23 -11.73 3.72

The Accra Bourse halted further rally of its benchmark Index, as price declines in some blue-chips stocks – MTN and CAL Bank Ltd- weighed on the market indices. At the closing bell, the GSE Composite Index recorded its first week-on-week decline of 0.89 percent, since the beginning of 2021, as it settled at 2,195.10 percent. The year-to-date return of the Index thus trimmed to 13.06 percent. The GSE Financial Stocks Index also posted a week-on-week decline of 0.38 percent as it settled at 1,849.04 points, corresponding to a reduced year-to-date return of 3.72 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 7.77 10.05 29.29
Total Value Traded (GHS M) 6.56 8.49 29.37
Market Cap (GHS M) 57,133.07 56,968.74 -0.29

Total traded volume after the week’s trade upped by 29.29 percent to settle at 10.05 million. This had a corresponding value of GHS8.49 million, with MTN Ghana Ltd dominating the week’s trade with 93.16 percent share of the traded volume. Market capitalization of the market, however, dwindled on account of the selling prices recorded on the Bourse by 0.29 percent to settle at GHS56,968.74 million.

Stock Price Movements

In all, six (6) equities saw price changes after the closure of the week’s trading activities. Enterprise Group Ltd led the gainers with a price uplift of 2 pesewas to trade at GHS1.44 per share. Fan Milk Ltd and Total Petroleum Ltd also gained a pesewa each to trade at GHS1.09 and GHS3.11 per share, respectively.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
EGL 1.40 1.42 1.44 0.02 2.86
FML 1.08 1.08 1.09 0.01 0.93
TOTAL 2.83 3.10 3.11 0.01 9.89

On the flip side, Unilever Ghana Ltd led the pack of laggards, losing 74 pesewas to trade at GHS6.73 per share. CAL Bank Ltd went down by 7 pesewas to trade at 68 pesewas per share. MTN Ghana Ltd also shed a pesewa to settle at 83 pesewas per share.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
UNIL 8.29 7.47 6.73 -0.74 -18.82
CAL 0.69 0.75 0.68 -0.07 -1.45
MTNGH 0.64 0.84 0.83 -0.01 29.69

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7246 5.7304 CAD 4.5728 4.5772
GBP 7.9315 7.9400 CFA 96.2788 96.3736
EUR 6.8064 6.8131 JPY 0.0526 0.0526
AUD 4.4297 4.4353 ZAR 0.3891 0.3894
NGN 70.6277 71.2423 CNY 0.8800 0.8803
Source: Bank of Ghana 19.03.2021

At the close of trading on the interbank currency market, the Ghana cedi advanced against the both the British Pound and the Euro but depreciated against the US dollar. The US dollar firmed on hawkish commentary by the US Fed on growth expectation of the US economy. The projection of an average growth rate of 6.5 percent for the next decade, coupled with decision to leave interest rates unchanged until 2023, offered support to the greenback. The recent easing of yields on Government treasury securities, which has risen significantly in recent times, also supported the dollar’s rally. The yield on the 10-year bond edged below 1.70 percent, losing about 5 basis points. The US dollar thus appreciated by 0.02 percent against the local currency as its selling price jumped to GHS5.73 on the interbank currency market. The year-to-date appreciation of the cedi thus narrowed to 0.57 percent.

The British pound pushed its upward rally, truncated by dovish sentiment expressed by UK’s central bank. The decision by the Bank of England to leave its policy rate unchanged at 0.10 percent, amidst downbeat projections about the pace of economic recovery, weighed on the pound in the week under review. Economic recovery is tipped to be slow in 2021 following challenges within its labour market. Unemployment in the UK, which is currently at 5.1 percent, is tipped to rise further over the next couple of quarters due to the impact of the pandemic on economic activities. The British pound thus ended the week’s trade with 0.28 percent depreciation against the local currency, as its selling price reduced to GHS7.94 on the interbank currency market. The year-to-date depreciation of the cedi thus trimmed to 0.77 percent.

The Euro depreciated as it ended most of its trading session on a defensive note. This follows the challenges by some member countries in containing the spread of the pandemic, adding to already existing ill-sentiment about the health of the Eurozone. France recorded its highest infection of 38,501 last Thursday with nearly 260 death, despite the extensive vaccination, sparked investors’ concerns about how fast the Eurozone’s economy will recover. The Euro thus tumbled posting 0.39 percent week-on-week depreciation against the cedi at a reduced selling price of GHS6.81. The year-to-date appreciation of the cedi thus rose to 3.73 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,841.94 3,943.34 2.64 4.99
DJIA 31,496.30 32,778.64 4.07 7.10
FTSE 100 6,630.52 6,761.47 1.97 4.66
NIKKEI 225 28,864.32 29,717.83 2.96 8.28
FTSE/JSEAllShare 68,271.19 68,209.86 -0.09 14.81
NSE All Share 39,331.61 38,648.48 -1.74 -4.03
Nairobi All Share 161.67 162.08 0.25 6.55

The US stocks market recorded losses after the week’s trade following the negative impact of dwindling yields on Government’s treasury securities on banking stocks. The 10-year US Bond retreated in most of the trading sessions in the week from the 1.75 percent peak last Friday, affecting the value of the treasury comments in banks assets. This, coupled with Fed’s decision to leave interest rates unchanged during the recent monetary policy review, weighed on the banking sector stocks, which also affected the overall performance of the bourse. The S&P 500 thus went down by 0.77 percent to settle at 3,913.10 points. The Dow Jones Industrial Average also went down by 0.46 percent to close at 32,627.97 points.

The London Stock Exchange tumbled on account of downward pressures on mining sector stocks on the Bourse. Anglo American, one of the leading weighted mining companies on the London bourse, had its share price falling by 3 percent. Rio Tinto also tumbled by 1.40 percent to affect market activities. The FTSE 100 thus posted a week-on-week fall of 0.78 percent as it settled at 6,708.71 points.

The Japanese Stocks Exchange finished on a positive note, lifted by demand pressure for share in the Paper & Pulp, Railway & Bus and Real Estate sectors. Cyber Agent Incorporated and Taiheiyo Cement Corporation led the gainers with 6.01 percent and 5.76 percent rise to support the index. The Nikkei 225 thus posted a weekly rise of 0.25 percent as it settled at 29,792.05 points.

On the African equity market, the Nairobi All Share Index sustained its upward rally with 3.0 percent gain to settle at 166.94 points. The Johannesburg All Share Index, however, dropped further by 3.37 percent to settle at 65,911.27 points after the week’s trade. The Nigerian All Share Index also went down by 0.69 percent to settle at 38,383.39 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 69.36 64.53 -6.78 24.58
Gold $/ounce 1,698.50 1,741.70 1.27 -8.09
Cocoa$/metric tonne 2,706.00 2,493.00 -3.15 -4.23
Coffee $/pound 1.2875 1.2545 -5.29 -2.18
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil sunk further after the week’s trading on the international commodities market, as recent reported COVID-19 infection cases in Europe dampened market sentiment. In France, a total of 268 new death was recorded on the 18th of March 2020, which has sparked fresh lockdown restrictions, weighed on the demand side of the market. Brent crude oil, after posting its fifth daily contraction, lost $4.69 to trade at $64.53 per barrel.

Gold closed higher, as it continues to benefit from easing yields on treasury securities in the advanced economy. The recent spike in yields on treasury securities, which significantly which affected the price of the yellow metal on the international market, appears dimming. Gold thus added $21.90 to finish the week’s trade at $1,741.70 per ounce.

Cocoa shed price on the global commodities market, dropping to its lowest in three weeks on signs of improving production side of the market. Ivory Coast continues to record high export activities at its ports, with the supply of beans rising by 0.4 percent to 1.72 million metric tonnes between 1st October 2020 to 14th March 2021. This affected the outlook of the crop hence, $81.00 decline in unit price to close at $2,493.00 per metric tonne.

Coffee retreated to end the week’s trade in the red, as the resurgence dollar made the soft crop expensive for non-dollar holders. This, coupled with the threats of oversupply of the beans from Brazil due to recent favourable climatic conditions negative, affected the crop. The soft crop thus went down by 7 cents to trade at $1.25 per pound.

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