• Government to borrow GHS17.9 billion in the second quarter, 2020
• Yields on both the 91- and 182-day T-bills eased by 20 bps.
• The GSE extended its losses.
• The Ghana Cedi appreciated against the British Pound and the Euro but lost to the US Dollar.
• Global equity markets tumbled amid the covid-19 pandemic.
• Brent crude oil surged on hopes of a truce in the Saudi-Russia price war.

Macroeconomic update

Government seeks to borrow GHS17.9 billion in Q2, 2020

The Government of Ghana is set to borrow a gross amount of GHS17.9 billion in the second quarter from the domestic market as per its issuance calendar. Out of this, a total amount of GHS13.6 billion has been earmarked to settle maturing obligations whereas the balance of GHS4.27 billion is designated to meet Government’s financing requirements. The 91-day Treasury-bill constitutes 45.66 percent (GHS8.2 billion) of government’s intended borrowing; followed by the 364 day T-bill with 15.31 percent (GHS2.7 billion) whereas the 3-year bond accounts for 10 percent (GHS1.8 billion).Government hopes to raise an amount of GHS800 million  through the sale of a 7-year and 10-year bonds respectively and  GHS700 million from the issuance of the 2-year bond. Ghana’s total debt for 2019 stood at GHS 218 billion representing a debt-to-GDP Ratio of 63.00 percent (Bank of Ghana December summary of financial and economic data).An amount of GH¢105.5 billion (30.5 per cent of GDP) of the total debt was secured from the domestic economy.

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.

The Government of Ghana treasury securities recorded rate moderation in the week under review. At the closing bell, the yield on the 91-Day T-Bill dipped by 20 basis points to settle at 14.44 percent. Similarly, the yield on the 182-Day eased by 20 basis points to close at 14.95 percent. The yield on the 364-Day T-Bill, however, remained unchanged at 17.65 percent. The yields on the treasury notes and bonds were, however, unaltered as they were not scheduled for the week’s auction.

A total amount of GHS488.18 million was accepted by government out of the GHS521.22 million tendered bids. The amount raised exceeded the intended target of GHS452.00 million with the 91-Day T-Bill dominating Government’s purchase by 74.94 percent. At the upcoming auction, the Government hopes to raise an amount of GHS1.10 billion through the issuance of the 91-Day, 182-Day and 364-Day T Bills.

The yield curve sustained its normality despite the marginal adjustment of rates on treasury instruments observed at the week’s auction. The continued downtrend in yields of Government of Ghana treasury securities is geared towards deepening the private sector investment and making cost of capital cheaper. This is expected to boost local production especially in the manufacturing and pharmaceutical industry which has been necessitated by a slump in international trade following trade restrictions imposed to control the spread of the covid-19. It is imperative that policy makers adopt growth stimulating policies and further create a business-friendly environment to support and build all nascent businesses in the country. 

Ghana Stock Exchange

The Ghana Stock Exchange extended its bearish run as investors fled risky assets on market uncertainties emanating from the  fast-spreading coronavirus amid a two-week partial lockdown  imposed in certain  parts of the country. At the close of the week’s trading activities, the GSE-Composite Index dipped by 81 basis points  to settle at 2,143.09 points, representing a year-to-date loss of 5.05 percent. The GSE-Financial Stocks Index also posted a week-on-week decline of 1.62 percent as it settled at 1,894.50 points corresponding to a year-to-date loss of 6.20 percent.

Market activities improved in the week under review as compared to the previous week’s market activities. A total turnover of 564,659 shares worth GHS1.52 million exchanged hands representing 156.14 percent increase over  last week’s outturns. GCB Bank Ltd dominated market activities as it accounted for 42.08 percent of the overall traded volume. Market capitalization, however,  dipped  by 0.32  percent to settle at 55,814.24  points.

Stock Price Movements

The week’s trading ended with nine equities recording price changes: three advancers and six laggards. Enterprise Group Ltd topped the advancers with a price gain of 10 pesewas to trade at GHS1.70 per share. Ghana Oil Company Ltd and CAL Bank Ltd also added 2 pesewas and a pesewa to trade at GHS1.64 per share and 83 pesewas per share respectively.

On the flip side of the bourse, Ecobank Ghana Ltd declined by 40 pesewas to trade at GHS6.50 pesewas per share. GCB Bank Ltd and Fan Milk Ltd also eased by 19 pesewas and 7 pesewas to settle at GHS4.50 per share and GHS4.00 share respectively. Trust Bank Ltd and Standard Chartered Bank Ghana Ltd dipped by 6 pesewas and 5 pesewas to end the day at 34 pesewas per share and GHS18.94 per share respectively. Total Ghana Ltd completed the laggards list with 5 pesewas loss to trade at GH2.85 per share.

Currency Market

Source: Bank of Ghana 03.04.2020

On the interbank currency market, the Ghana Cedi appreciated against the British Pound and the Euro but lost its footing against the US Dollar. The US dollar rose on the international forex market buoyed by investors’ flight for safety   which muted the impact of daunting employment data in the US. The unemployment rate in United States rose to 4.4 percent in March from 3.5 percent in February, its highest in three years whereas Nonfarm Payrolls for march fell by 701,000; its first slump in nine years. These notwithstanding, the greenback surged as fears of an economic recession sparked demand for the safe haven currency. The US Dollar benefitted from these developments as it appreciated by 0.43 percent to sell at GHS5.46 on the interbank currency. The year-to-date appreciation of the cedi thus narrowed to 1.33 percent.

The British Pound was on the backfoot following the release of a string of weaker-than-expected economic data in the UK. Manufacturing activity slowed to an eight-year low of 47.8 in March from 51.7 in February and the seasonally adjusted Services Purchasing Managers’ Index (PMI) was revised lower to 34.5 in March against the projected 34.8 driven by a  slump in economic activities in the wake of the coronavirus pandemic. The British Pound succumbed to these developments as it depreciated by 0.18 percent to exchange at GHS6.70 on the interbank currency market. The year-to-date appreciation of the Cedi thus increased to 9.38 percent.

The Euro sunk lower weighed by economic uncertainties on the outlook of the bloc. In the week under review, disagreement over a financial rescue package where all member states would be jointly and severally liable-Coronabonds for countries struggling to tackle the novel virus affected demand for the single currency. The Euro was also weighed by soft data inflation which slowed to 0.7 percent in March from 1.2 percent in February following a covid-19 driven fall in oil prices. The Euro thus registered a weekly loss of 1.68 percent to sell at GHS5.90. The year-to-date appreciation of the Cedi thus rose to 5.32 percent.

International Markets

The US equity market edged lower as the release of disappointing employment data amid rising cases of covid-19 sparked fears of an economic recession. The US economy posted job losses of 701,000 in March and unemployment rate jumped to 4.4 percent in March from 3.5 percent in February on account of prolonged lockdown measures to curb the spread of the novel virus. Stocks within the Utilities, Telecoms and Financial sectors were the worst hit with the S&P 500 declining by 2.08 percent to settle at 2,488.65 points. The Dow Jones Industry Average also shed 2.70 percent to close at an index level of 21,052.53 points.

The London Stock Exchange closed in the red following downbeat readings from the manufacturing sector which weighed on investors’ risk-taking sentiments. The seasonally adjusted services PMI contracted steeply to 34.5 in March, below the previous outturn of 53.2 in February owing to restrictive measure enforced to combat the covid-19. The FTSE 100 thus posted a week-on-week loss of 1.29 percent to end the week’s trading at 5,395.50 points.

The Japanese Stock Exchange sank lower on heightened speculations of a lockdown in Japan as reported cases of the coronavirus passed the 1,000 mark. Investors thus sold off risky assets as they braced for a possible disruption in economic activities and shutdown in the wake of the covid-19 spread. The Nikkei 225 slipped by 8.09 percent to settle at an index level of 17,820.19 points.

The African equity markets recorded mixed outturns in the week under review. The Johannesburg All Share Index advanced by 3.85 percent to settle at 44,598.7 points. Similarly, the Nairobi All Share Index upturned by 8.94 percent after the week’s trade to settle at 138.68 points. The Nigerian All Share Index, on the downside, dipped by 3.51 percent to settle at 21,094.62 points.

Commodities

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

Brent crude oil rebounded in the week under review following comments by US President- Donald Trump on an imminent agreement between  Russia and Saudi Arabia to cut production by approximately 10-15 million barrels; with the latter calling for an emergency meeting between the Organization of the Petroleum Exporting Countries (OPEC) and its allies for a resolution to the long standing price war. Brent crude oil thus rose by 36.82 percent to settle at $34.11 per barrel.

Gold closed higher as downbeat weekly jobless claim data in the United States fuelled safe-haven bids. Filing for unemployment benefits in the US jumped by 6.6 million for the week ended March 28, bringing the total to 10 million claims in the past two weeks. Investors thus sought refuge in the safe haven commodity amid a disruption in economic activities following lock-down measures adopted to combat the covid-19 pandemic. Gold thus traded 1.27 percent higher at $ 1,645.70 per ounce.

Cocoa soared following continued favourable weather conditions in Top Grower-Ivory coast. Frequent rainfall and sunny spells in major growing regions ahead of the marketing season increased the prospects of the mid-crop. Cocoa thus recorded a week-on week gain of $7.00 to close at $2,264.00 per metric tonne.

Coffee tumbled on the international commodities market driven by the depreciation of the Brazilian real despite concerns of tightening supply from major exporters such as Brazil and Columbia. Coffee thus slipped by a cent to end the trading week at  $1.15 per pound.

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