• 2019 Inflation ended at 7.9 percent.
• 91-Day T-Bill upped 2 basis points.
• GSE extended its bearish into 2020.
• Cedi lost footing versus the British pound and US dollar.
• Gold trimmed gains as US-Iran conflicts eased. 

Macroeconomic Update

2019 Inflation ended at 7.9 percent

Consumer Price Index dropped to 7.9 percent at year-end of 2019. This represents 0.30 percentage point decline from the November’s rate of 8.20 percent spurred by the reduced inflationary pressures recorded within the food and non-alcoholic beverages sector in the period under review. Inflation at the Food and non-alcoholic beverages sector which stood at 8.40 percent (constituting 44.4 percent of the overall inflationary effect) dropped sharply to 7.20 percent in December - representing 39.7 percent of the overall inflation effect. This was on the back of lower price rise in commodities such as vegetables, fish & sea foods and cereal products when compared to their rate of price change in November 2019. Inflation at the Non-food segments of the economy for the month of December, however, upped by 0.50 percentage points to 8.50 percent primarily driven by high cost of Transportation and Housing. 

At the regional level, three out of the ten traditional regions outperformed the national inflation of 7.9 percent. Greater Accra posted the highest inflation for the month of December at a rate of 12 percent. Volta Region followed suit with inflation rate of 9.3 percent and Upper West Region recording an inflation of 8.6 percent. Ashanti Region, however, recorded the lowest rate of 5.0 percent in the month of December. Presented below is the regional inflationary levels for both December and November 2019:

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.

At the close of the week’s auction, the yield on 91-Day T-Bill upped by 2 basis points to settle at 14.69 percent. That on the 182-Day and 364-Day T-Bills, however, remained unchanged at 15.17 percent and 17.83 percent respectively. The yield on the Government of Ghana treasury notes and bonds also remained the same.

Government accepted all the GHS720.79 million worth of bids tendered by investors at the auction. This exceeded the GHS593.00 million target slated to be raised at the week’s auction. The 91-Day T-Bill dominated Government’s purchase, constituting 89.32 percent share of the overall bids accepted. A total of GHS822.00 million is expected to be raised at the next auction from the issuance of both the 91-Day and 182-Day Treasury bills.

The yield curve sustained its normality as business and consumer sentiment remains robust to propel the deepening of private sector participation in the domestic economy. The Bank of Ghana Business Confidence Index significantly improved to 98.1 points in August 2019 from 94.1 points in June 2019 and this is expected to offer positive signal amidst other bullish economic indicators for investors to sustain the normality of the yield curve.

Ghana Stock Exchange

The Ghana Stock Exchange recorded a negative week-on-week outturn after the week’s trading activities. This followed significant sell-off recorded on the bourse attributed to the extension of the 2019 bearish sentiment into the new year. At the closing bell, the GSE Composite Index dropped by 0.29 percent to settle at an index level of 2,252.13 points, representing a year-to-date loss of 0.22 percent. The GSE Financial Stocks Index similarly went down to a year-to-date loss of 0.60 percent.

Market activities saw a decline when compared with the previous week’s outturn. A total of 1.90 million shares valued at GHS1.08 million exchanged hands in the week under review, representing 88.81 percent decline from the previous week’s trading in terms of volume. MTN Ghana Ltd led the activity chart with 54.80 percent share of the overall traded volume. Market capitalization also slipped by 0.12 percent to settle at GHS56,737.00. 

Stock Price Movements

On price movements, a total of 5 equities altered their share prices. Republic Bank Ghana Ltd led the bulls run with price appreciation of 4 pesewas to trade at 60 pesewas per share. CAL Bank Ltd and SIC Ltd also added a pesewa each to their week opening prices to trade at 90 pesewas and 9 pesewas per share respectively.

On the flip side, Ecobank Ghana Ltd tumbled by 34 pesewas to occupy the bottom of the laggards list. It ended the week’s trading session at GHS7.75 per share. Intravenous Infusion Ltd also dropped its share price by a pesewa to settle at 4 pesewas per.

Currency Market

Source: Bank of Ghana 10.01.2020

On the interbank currency market, the Ghana cedi advanced against the Euro pound but lost its footing versus the US dollar and the British pound. The US dollar surged to two-months high on account of easing geo-political tensions and bullish economic readings in the US. Tensions between the US and Iran ebbed as Trump struck a conciliatory tone by proposing sanctions on Iran as opposed to violence. Strong private payroll data rising by 202,000 in December against a forecast of 150,000 also bolstered investor’s confidence to buoy the value of the greenback. The US Dollar thus appreciated by 0.04 percent to sell at GHS 5.54 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 0.05 percent. 

The British pound tumbled on Brexit worries and dovish monetary policy stance adopted by the Bank of England in the week under review. The rising possibilities of UK crashing out of the European Union without a favorable trade deal by the end of 2020 and the decision by Mark Carney – Governor of the Bank of England to tackle the slowing economic activities in UK by cutting interest rate weighed on the pound. Following Pound’s outturn, it recorded a week-on-week appreciation of 0.03 percent as it traded at GHS 7.24 on the interbank currency market. The year-to-date appreciation of the cedi thus reduced to 1.09 percent.

The Euro dimmed its outlook on the fragile outlook of Eurozone’s economy.  Germany’s Industrial orders dropped sharply by 1.3 percent in November 2019 against a forecast rise of 0.3 percent whereas unemployment data from the Eurozone failed to improve as it steadied at 7.5 percent in December 2019. These dragged the single currency to its lowest in 2-years on the international currency market. The Euro thus depreciated by 0.35 percent to sell at GHS 6.15 on the interbank currency market leaving the cedi to post a year-to-date appreciation of 1.00 percent.

International Markets

US equity posted a week-on-week gain buoyed by upbeat labour market data which eased inflationary worries and signaled solid economic footing in the world’s largest economy. S&P 500 thus rose by 0.59 percent to settle at 3,265.35 point. The Dow Jones Industrial Average also recorded a week-on-week rise of 0.42 percent to settle at 28,823.77 points.

The London Stock Exchange closed the trading week in the gain as the US-Iran tension eased during the latter half of the week following Trump’s consolidatory remarks. FTSE  100 thus finished with a rise of 0.17 percent to settle at an index level of 7,587.85 points.

The Nikkei 225 finished on a positive note spurred by demand pressure in shares of Paper & Pulp, Railway & Bus and Real Estate. Nikkei 225 thus upped by 0.82 percent to settle at 23,850.57 points. 

On the African equity market, the Nigerian All Share Index posted a week-on-week rise of 9.07 percent to settle at an index level of 29,415.39 points. The Nairobi All Share Index also recorded a rise of 2.38 percent to settle at 171.36 points. The Johannesburg All Share Index, however, fell by 0.56 percent to settle at an index level of 57,484.84 points. 

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

Brent crude oil posted its biggest decline in six months as recent rally spurred by the tensions between the US and Iran over the killing of the latter’s military leader abated after leaders of these countries agreed to back away from a full-scale conflict. Brent crude oil was thus hit by over-supply concerns on the international commodities market to record a week-on-week loss of $3.63 to trade at $64.98 per barrel.

Gold ended the trading week in the gains despite cooling geo-political conflict between the US and Iran. Gold which received significant boost as a result of the potential spillover of the US-Iran conflict sharply made a U-turn last Friday following the cease-fire remarks by both leaders. Gold thus reduced its weekly gain to $7.70 to settle at $1,560.10 per ounce.

Cocoa recorded gains on the international commodities market as supply of the soft crop from top grower – Ivory Coast remains threatened by the dry harmattan winds. Farmers reported the extent of damage from the devastating dry weather conditions as it ravage cocoa pods and further sapped soil moisture which affected the production. Cocoa thus added $70.00 to trade at $2,589.00 per metric tonne.

Coffee posted one-and-half month decline on technical corrections on the international commodities market as investor believed that its gains in November were artificially manipulated. Coffee thus fell by 7 cents to end the week’s trade at $1.19 per pound.     

Why Choose IGS Financial Services Limited?

We currently operate from six offices (Tarkwa, Takoradi, Obuasi, Tema, Kumasi and Accra) in three regions and we are best placed to assist you achieve your financial goals and objectives because of our:

• adoption of international standards and best practice
• compliance with regulatory requirements
• very strong values (client focus, integrity, teamwork, and excellence) 
• superior investment management policy & approach
• high returns with comprehensive risk management (including appropriate insurance policies to ensure safety of funds
• strong, competent, and properly licensed advisers and managers
• very strong business fundamentals
• proven track record with extensive experience
• provision of value-added services
• Increased our professional indemnity insurance from GHS40.00 million to GHS 80.00 million in 2018.

Please find below our remarkable historical performance in terms of funds under management and other relevant KPIs:

*As at September 2018

Kindly give us a call or visit any of our offices and we would help you invest, grow, and secure your investments and retirement benefits.

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