• January PPI rose to 13.3 percent.
• Yields on short dated treasury instruments posted mixed outturns.
• The GSE equity indices edged up. 
• The Ghana cedi sustained its bullish run against the 3 major trading currencies. 
• Gold rose to a 7-year high on fears of coronavirus spread.

Macroeconomic update

January PPI rose to 13.3 percent

The producer price inflation (PPI) for the month of January 2020 settled at 13.3 percent, representing 3 basis points rise over December 2019’s figure of 13.00 percent. High input cost at the manufacturing sector following the excessive dependence on imported raw and semi-raw materials resulted in the rise of the PPI. Inflation at the manufacturing sector which constitutes more than two-thirds of the total industry increased by 0.8 percentage to settle at 9.6 percent. The PPI, however, for the Mining & Quarrying and Utilities sub-sectors dropped by 1.5 percent and 0.1 percent to settle at 33.7 percent and 12.7 percent respectively. 

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.

Last Friday, the yield on the 91-Day T-Bill marginally increased by 5 basis points to settle at 14.75 percent. Yields on the 182-Day however dipped by a basis point to settle at 15.17 percent. Interest rates on the other Government of Ghana treasury securities and bonds were, however, unchanged as they were not scheduled for the week’s auction.

At the close of the week’s auction, Government accepted all the bids worth GHS743.63 million tendered by the auction. The accepted bids were however, below the GHS797.00 million target expected to be raised at the week’s auction and the GHS1,006.16 million raised at the previous auction. The 91-Day T-Bill dominated Government’s purchase as it constituted 90.84 percent of the GHS743.63 million bids raised at the auction. Government is expectant to raise an amount of GHS800.00 million from the issuance of both the 91-Day, 182-Day and 364-Day T-Bills. 

The yield curve sustained its normality as the rate adjustment recorded at the week’s auction were marginal and unable to alter its upward slopping. This is on the back of a robust domestic economy and commitment by the Central Bank to lengthen the term structure of Government securities whiles making returns on long-dated treasury securities, much attractive than others.

Ghana Stock Exchange

Ghana’s capital market sustained its recovery mood trimming its benchmark losses. The recovery followed uptick in risk-taking sentiment and investor expectation of dividend declaration by some blue-chip stocks in the near coming months as companies continue to release their 2019-year ended earnings. The positive closure of the market was also supported by some corporate activities, as PZ Cussons and Total Petroleum Ltd announced changes to their board of directors. At the closing bell, the GSE-Composite Index thus posted a weekly rise of 0.04 percent to settle at an index level of  2,204.47  points, representing a year-to-date loss of 2.33 percent. The GSE Financial Stocks Index also made a weekly gain of  0.08 percent to post a positive year-to-date loss of  0.26 percent.

Market activities were much improved  than recorded at the previous trading session. Total volume of shares which exchanged hands in the week’s trade stood at 18.85 million valued at GHS13.00 million. This represents 308.01 percent decline from the 4.62 million shares valued at GHS3.13 million which exchanged hands at the previous week’s session. MTN Ghana Ltd dominated the week’s trading activity as it accounted for 96.66 percent of the overall traded volume. Market capitalization also upped by 0.01 percent  to settle at GHS56,631.51 million.

Stock Price Movements

A total of three equities altered their week opening prices comprising 2 gainers and a laggard.  Standard Chartered Bank Ghana Ltd emerged as the best performing stock, advancing by 5 pesewas to settle at GHS 19.09 per share. SIC Insurance Company Ltd also added a pesewa to trade at 10 pesewas per share. Intravenous Infusions Ltd, on the other hand, shed a pesewa to close at

3 pesewas per share.

Currency Market

Source: Bank of Ghana 21.02.2020

In the week under review, the Ghana cedi sustained its bullish run against the 3 major trading currencies on the interbank forex market. The US dollar rose on the international currency market as renewed fears of the coronavirus as death toll in South Korea rose by over 200 and the subsequent warning by the United States Army Medical Research Institute of Infectious Diseases triggered safe-haven bets for the greenback.  Despite the Dollar gain’s, it shed 0.28 percent against the Ghana Cedi to exchange at GHS5.29 on the interbank currency market. The year-to-date appreciation of the cedi thus surged to 4.75 percent last week.

The British pound lost its footing as uncertainties on the post-Brexit trade negotiations between the UK and European Union outshone bullish job data. Strong employment data as job creation in the last quarter of 2019 upped by 180,000 to 32.93 million, beating the forecasted 160,000 rises was unable to uplift the pound. This follows Britain’s refusal to succumb to the European union’s laws on free-trade agreement and to guarantee fair competition based on environmental & labour standards. The British pound thus recorded a week-on-week depreciation of 0.58 percent to sell at GHS 6.86 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 6.73 percent.

The Euro extended its losses weighed by downbeat economic data which sparked fears of a recession in the bloc. Germany’s ZEW index, a major gauge of investor’s sentiments, slipped from a four year high of 26.7 points in January to 8.7 points in February to dent investor’s sentiment in the region. The Euro thus, posted a weekly depreciation of 0.25 percent as it selling price fell to GHS 5.74 on the interbank currency market. The year-to-date appreciation of the Cedi thus rose to 8.26 percent.

International Markets

US equity market recorded its first weekly loss in three weeks as investors fretted over the fast spreading of the coronavirus and its potential impact on the global economy. According to the World Health Organisation, South Korea recorded 100 new infections of the coronavirus, Iran had its first infection, whereas the confirmed cases in the US rose to 34 last week. The S&P 500 thus went down by 1.25 percent to settle at 3,337.75 points. The Dow Jones Industry Average also dropped by 1.38 percent to settle at an index level of 28,992.41 points.

The London Stock Exchange closed in the red following the downward revision of company’s earnings for the 2020 as the negative effects of the COVID-19 heightens. Pearson Ltd, one of the listed stocks on the bourse, trimmed its forecasted profit for the 2020 financial year from £581 million to between £410 million to £490 million due to expected economic slowdown. The FTSE 100 thus fell by 0.07 percent to end the week’s trading at 7,403.92 points.

The Japanese Stock Exchange posted a weekly decline following reports that the Japanese government desires to limit foreign investors ownership in some 12 selected sectors as measures to beef up its security. Defence, nuclear power, aerospace, utilities, gas and telecommunication sub-sectors were among the twelve sectors earmarked with about 400 to 500 companies tipped to be affected by this exercise. The Nikkei 225 thus went down by 1.27 percent to settle at an index level of 23,386.74 points.

On the African equity market, the Johannesburg All Share Index went down by 0.91 percent to settle at 57,336.21 points. The Nigerian All Share Index dropped by 1.32 percent to settle at 27,388.62 points. The Nairobi All Share Index also shed 2.46 percent after the week’s trade to settle at 158.38 points.

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

Brent crude oil recorded a marginal gain on the international commodities market as new cases of the coronavirus and weak Asian economic data fuelled market uncertainties to reduce investors optimism for a production cut ahead of OPEC’s meeting on 6^th March 2020. China’s GDP was tipped by market analyst to fall sharply in the first quarter of 2020 on account of the rising death toll of the COVID-19 which trimmed earlier gains of the energy commodity. Brent crude oil thus ended with a week-on-week rise of $1.18 percent to trade at $58.50 per barrel.

Gold rose to a seven-year high as the unexpected rise in death toll of the COVID-19 pandemic in South Korea by over 200 shifted investors demand for the safe-haven asset. On account of this safe-haven drift, the yellow metal’s target for the second quarter of this year was upwardly reviewed from $1,750.00 per ounce to $1,850.00 per ounce. Gold thus added $61.90 to trade at $1,644.60 per ounce.

Cocoa upped its value despite mixed climatic conditions in top growers – Ivory Coast and Ghana blurring the outlook of the soft crop on the international commodities market. Ghana’s dry weather condition is expected to negatively affect supply of beans onto the international market from an initial forecast of 875,000 tonnes to a figure between 790,000 – 820,000 tonnes. Ivory Coast, on the other hand, recorded some rainfall, raising farmers hopes of higher yields in the upcoming season which trimmed earlier gains of the soft crop. Cocoa thus gained $18.00 to trade at $2,922.00 per metric tonne.

Coffee lost marginally on the international commodities market as the significant depreciation of the Brazilian real against the US dollar subdued the production threat concerns from top grower – Vietnam. Coffee thus slight dropped to close at $1.09 per pound.

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