Weekly Highlights

? June’s inflation dipped by 10 basis points to settle at 11.20 percent.
? Government issued the 6-year bond at 19.50 percent
? The GSE equity indices closed mixed.
? Cedi appreciated against the US Dollar but lost to the British Pound and the Euro.
? Gold extended its winning streak to a sixth-straight week.

Macroeconomic Update

June’s inflation eased to 11.20 percent

Consumer price inflation for June dipped by 0.1 percentage point to settle at 11.20 percent from May’s figure of 11.30 percent. This represents 120 basis points divergence from the upper bound of the medium-term inflation target of 10 percent. Inflation at the Food and Non-Alcoholic Beverages sector declined by 130 basis points in the month of June to record a year-on-year inflation of 13.80 percent lower than the 15.10 percent posted in May; with the vegetables and fruits & nuts sub-sectors recording the sector’s highest inflation of 28.80% and 17.40% respectively. However, the Non-food inflation settled at 9.20 percent in June representing an 80 basis points rise following inflationary pressures within the Housing, Water, Electricity and Gas sub-sectors. At the regional level, inflation was least recorded in the Upper West and Volta regions (4.3%) but highest in the Greater Accra (15.00%), Western (13.50%) Eastern regions (12.6%).

Government issued the 6-year bond at 19.50 percent

The Government in the week under review raised an amount of GHS358.55 million through the issuance of the 6-year bond at an interest rate of 19.50 percent. As per Government’s debt issuance calendar for June-August 2020, an amount of GHS800 million is expected to be raised through the issuance of the 6-year bond in July. The Cedi denominated bond which targeted both resident and non-resident investors had an initial pricing guidance of 19.30 percent - 19.50 percent but the final price guidance settled at the upper bound of 19.50 percent. Ghana’s total debt for 2019 stood at GHS218 billion representing a debt-to-GDP Ratio of 63.00 percent (Bank of Ghana December summary of financial economic data, 2019). An amount of GHS105.50 billion out of the total debt stock was raised from the domestic economy.

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 11.20
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 7.40
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 n/a
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 4.7 n/a
Public Debt (% of GDP) 69.8 57.6 63.00 n/a n/a
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 n/a
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
Jul 20 – 25 13.87 14.06 16.92 18.75 18.85 19.25
Jul 13 – 17 13.99 14.02 16.92 18.75 18.85 19.25
Jul 06 – 10 13.97 14.09 16.89 18.75 18.85 19.25
2020Yr.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 yields on the 91-Day T-Bill dipped by 12 basis points to close at 13.87 percent. The interest rates on the 182– Day T-Bill, however, upped by 4 basis points to settle at 14.06 percent. Government also issued a 6-year Bond at an interest rate of 19.50 percent. Yields on the other treasury notes and bonds remained unchanged as they were not scheduled for the week’s auction.

Results of Auction held on 17th July, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 621.44 621.44 13.8704
182-Day T-Bill 110.24 110.24 14.0580
6-Year Bond 358.55 358.55 19.5000

The week’s auction closed with Government accepting all the GHS1,117.23 million worth of bids tendered by investors. This exceeded the week’s target of GHS 803.00 million and the GHS933.19 million raised at the previous week’s auction. The most accepted bids at the auction was the 91-Day T-Bill as it constituted 55.62 percent of the total bids raised. An amount of GHS1,261.00 million has been set as the target for the upcoming auction through the issuance of the 91-Day,182-Day, and 364-Day treasuries.

As largely expected, the yield curve sustained its normality following the general positive sentiment investors have in the primary market and the right trending of major economic indicators. The money market continues to dominate investors’ choice following the persistent downtrend on the equity market and lingering uncertainties associated with the covid-19 pandemic which has reduced demand for risky assets.

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 -17.54
GSE-FSI -19.93 49.51 -6.79 -6.23 -14.72

The equity market indices closed mixed with the GSE Composite Index trimming 0.62 percent to settle at an index level of 1,861.24 points, representing a year-to-date loss of 17.54 percent. The GSE Financial Stocks Index, however, advanced by 0.15 percent to settle at 1,722.38 points, corresponding to a year-to-date loss of 14.72 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 6.58 30.69 366.41
Total Value Traded (GHS M) 3.95 17.52 343.55
Market Cap (GHS M) 52,837.03 52,551.92 -0.54

Market outturns improved as compared to the previous week’s trading session. At the close of the week’s trades, a total turnover of 30.69 million shares valued at GHS17.52 million exchanged hands representing over three hundred percent increment over previous week’s traded volume. Liquidity was mainly driven by MTN Ghana Ltd as it accounted for 99.87 percent of the overall traded volume. Market capitalization, on the other hand, slipped by 0.54 percent to settle at GHS52,551.92 million.

Stock Price Movements

GCB Bank Ltd was the sole price gainer on the bourse, it advanced by 34 pesewas to close at GHS3.74 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 5.10 3.40 3.74 0.34 -26.67

On the downside, Fan Milk Ltd lost 10 pesewas to trade at GHS1.65 per share. MTN Ghana Ltd and Ecobank Transnational Incorporated also shed a pesewa each to settle at 56 pesewas per share and 6 pesewas per share, respectively.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
FML 4.12 1.75 1.65 -0.10 -59.95
MTNGH 0.70 0.57 0.56 -0.01 -20.00
ETI 0.08 0.07 0.06 -0.01 -25.00

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6681 5.6737 CAD 4.1743 4.1791
GBP 7.1055 7.1149 CFA 101.2998 101.2420
EUR 6.4754 6.4828 JPY 0.0529 0.0530
AUD 3.9570 3.9644 ZAR 0.3402 0.3406
NGN 67.0088 67.0969 CNY 0.8108 0.8115
Source: Bank of Ghana 17.06.2020

On the interbank currency market, the Ghana Cedi appreciated against the US Dollar but tumbled against the British Pound and the Euro. The US dollar lost its footing on the international currency market as covid-19 worries clouded investors outlook on the economy in uncertainty. Preliminary consumer sentiments index for July dipped to 73.2 points from the 78.1 points recorded in June driven by the covid-19 pandemic which has sparked fears of a prolonged recession. Following the greenback’s outturn, it recorded a marginal loss of 0.02 percent to sell at GHS5.657 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 2.42 percent.

The British Pound sank to a one-month low weighed by a string of downbeat economic data which dented hopes of an economic recovery. UK’s Gross Domestic Product for May grew by 1.8 percent, lower than the forecast 5.5 percent expansion. UK payrolls also eased by 650,000 in the second quarter of 2020 which affected demand for the Pound. The British Pound succumbed to these developments as it depreciated by 0.39 percent to exchange at GHS7.11 on the interbank currency market. The year-to-date appreciation of the cedi thus widened to 2.89 percent.

The Euro jumped to a four-month high on Friday as investors eyed a relief package deal ahead of the EU summit. Market sentiments improved on optimism of the bloc’s leaders reaching a compromise on the proposed 750-billion-euro rescue package to mitigate the impact of the pandemic on member countries which buoyed demand for the single currency. The Euro thus appreciated by 0.97 percent to sell at GHS6.48. The year-to-date depreciation of the Cedi thus narrowed to 4.16 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change(%) YTD(%)
S&P 500 Index 3,185.04 3,224.73 1.25 -0.19
DJIA 26,075.30 26,671.95 2.29 -6.54
FTSE 100 6,095.41 6,290.30 3.20 -16.60
NIKKEI 225 22,290.81 22,696.42 1.82 -4.06
FTSE/JSE All Share 55,417.89 55,896.31 0.86 -2.08
NSE All Share 24,306.36 24,287.66 -0.08 -9.52
Nairobi All Share 132.63 132.25 -0.29 -20.53

The US stock indices closed higher ahead of the release of the second quarter results of listed firms as investors increased their bets of more fiscal stimulus actions to alleviate the economic impact of the covid-19 pandemic. The S&P 500 posted a weekly gain of 1.25 percent to settle at an index level of 3,224.73 points. The Dow Jones Industrial Average also gained 2.29 percent to end the week at 26,671.95 points.

The London Stock Exchange edged up on hopes of an imminent covid-19 vaccine which fuelled investor’s demand for risky assets. The benchmark index soared on emerging reports that revealed that Oxford University’s vaccine trial drug was effective in boosting immunity against coronavirus. The FTSE 100 thus soared by 3.20 percent in the trading week to close at 6,290.30 points.

The Asian equity market rode on upbeat GDP data for China which expanded by 3.2 percent in the second quarter of 2020 beating the projected 2.5 percent rise. The Nikkei 225 thus settled at 22,696.42 points, representing a week-on-week gain of 1.82 percent.

On the African equity market, the Johannesburg All Share Index recorded a week-on-week gain of 0.86 percent to settle at 55,896.31 points. The Nairobi All Share Index, on the flip side, recorded a week-on-week loss of 0.29 percent to settle at 132.25 points. The Nigerian All Share Index also trimmed 0.08 percent to 24,287.66 points.

Commodities
Wk. Open Wk. Close Change YTD (%)
Crude Oil $/barrel 43.24 43.14 -0.23% -34.64
Gold $/ounce 1,801.90 1,810.00 0.45% 18.84
Cocoa$/metric tonne 2,278.00 2,160.00 -5.18% -14.96
Coffee $/pound 0.9615 1.0105 5.10% -22.09
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil tumbled on the international commodities spurred by OPEC's decision to loosen supply cut measures. OPEC and its allies agreed to scale back on output cuts from 9.7 million barrels to 7.7 million barrels per day which weighed on the value of the commodity. Brent crude oil thus shed 10 cents to close at $43.14 per barrel.

Gold extended its winning streak to a sixth-straight week as the cov-19 uncertainties and hopes of another round of stimulus action in the US and Europe sparked investors’ demand for the safe haven asset. Gold thus upturned by 0.45 percent to trade at $1,810.00 per ounce.

Cocoa closed in the red in the week under review despite below average rainfall recorded in both the western and eastern regions of Top Grower-Ivory Coast. Coast thus declined by 5.18 percent to settle at $ 2,160.00 per metric tonne.

Coffee firmed on the international commodities market driven by shrinking global supply of the beans from Top producers-Brazil and Vietnam. Coffee thus added by 5 cents to close at 95 cents per pound.
Note: The data in this publication is Friday on Friday (w/w)