Weekly Highlights

? June’s PPI at 8.70 percent
? Government seeks GHS11.80 billion to supplement 2020 budget.
? GSE indices ended in the gains.
? The Cedi depreciated against all the 3 major trading currencies.
? Wallstreet tumbled on rekindled US-China trade war tensions.
? Coffee sustained its upward trajectory.

Macroeconomic Update

June’s PPI settled at 8.70 percent

Producer price inflation for the month of June settled at 8.7 percent, representing 0.3 percentage points increment over May’s figure of 8.4 percent. The uptick was due to inflationary pressures at manufacturing sector, of the domestic economy, as it upped by 1.6 percentage points to settle at 2.7 percent in June. The producer price inflation for the mining & quarrying sector, however, dipped from the 42.5 in May to 35.20 percent in June whereas the producer price inflation for the utilities sub-sector was unchanged at 12.10 percent.

Government seeks GHS11.80 billion to supplement 2020 budget

The Government of Ghana through the Ministry of Finance seeks an additional amount of GHS11.80 billion to supplement the 2020 budget. This follows devastating impact of the COVID-19 pandemic on revenue generation and significant widening of the country's fiscal deficit. Government's revenue target has dipped by GHS13.6 billion, fiscal deficit sharply risen to 11.4 percent of GDP, exceeding the 5 percent limit stipulated in the Fiscal Responsibility Act, 2018(Act 982). As part of measures geared towards revamping the economy in the wake of the novel virus, government seeks to roll out short to medium term policies under two phases namely: Stabilisation and Revitalisation specifically:
? Intensifying support for farmers through planting for food and job
? National unemployment scheme
? Strengthening the health care system under the Emergency preparedness and Response Plan II
? Bills on Tax exemption and Private-Public partnerships
? Improving business environment through digitization, skills training and energy sector reforms among others.
Kindly click here to read the 2020 mid-year budget statement.
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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 27 – 31 13.97 14.05 16.82 18.75 18.85 19.25
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
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.

Yields on Government of Ghana Treasury securities witnessed mixed adjust. The yield on the 91-Day T-Bill rose by 10 basis points to close at 13.97 percent. The yield on the 182–Day and 364-Day T-Bills, nonetheless, trimmed a basis point and 10 basis points to settle at 14.06 percent and 16.82 percent, respectively. Interest rates on the other treasury notes and bonds were unaltered as they were not scheduled for the week’s auction.

Results of Auction held on 24th July, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 818.86 818.86 13.9685
182-Day T-Bill 194.81 194.81 14.0532
364-Day T-Bill 49.75 49.75 16.8194

Government accepted all the GHS1,063.42 million bids tendered at the week's auction. The amount raised missed the week’s target of GHS1,261.00 million and the GHS1,090.23 raised at the previous week’s auction. The 91-Day Bill dominated Government’s purchase as it constituted 76.96 percent of the total bids tendered. At the upcoming auction, an amount of GHS617 million is expected to be raised through the issuance of both the 91-Day and 182-Day T-Bills.

The term structure of the Government of Ghana bills is presented above, and this depicts normality as interest rate are generally higher for securities with longer maturities. Despite government’s desire to borrow more funds to supplement the 2020 budget, we foresee a stability in the yields following the relative attractiveness of the money market compared to other markets.

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 -17.47
GSE-FSI -19.93 49.51 -6.79 -6.23 -14.58

The week's trading on the Ghana Stock Exchange ended on a positive note spurred by improved demand for shares of GCB Bank ahead of its annual general meeting (AGM). The GSE Composite Index advanced by 8 basis points to settle at an index level of 1,862.77 points, reducing its year-to-date loss to 17.47 percent. The GSE Financial Stocks Index, also upped by 16 basis points to settle at 1,725.21 points, corresponding to a year-to-date loss of 14.58 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 30.69 32.77 6.77
Total Value Traded (GHS M) 17.52 19.51 11.36
Market Cap (GHS M) 52,551.92 52,567.82 0.03

Market activities upped significantly with a total volume of 32.77 million shares valued at GHS19.51 million exchanging hands in twelve equities. MTN Ghana Ltd led the activity chart as it accounted for 98.14 percent of the overall traded volume. Market capitalization upturned by 0.03 percent to settle at GHS 52,567.82 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, GCB Bank Ltd was the sole price gainer with 6 pesewas to close at GHS3.80 per share.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 5.10 3.74 3.80 0.06 -25.49

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6751 5.6807 CAD 4.2300 4.2336
GBP 7.2544 7.2640 CFA 99.2521 99.3378
EUR 6.6033 6.6090 JPY 0.0536 0.0537
AUD 4.0269 4.0344 ZAR 0.3399 0.3403
NGN 67.0142 67.1023 CNY 0.8097 0.8106
Source: Bank of Ghana 24.06.2020

On the interbank currency market, the Ghana Cedi depreciated against all the 3 major trading currencies. The US Dollar dimmed its look on the international currency market as it sunk to a four-month low on escalating cases of covid-19 and a delayed stimulus package. In the week under review, the confirmed cases of coronavirus crossed the 4 million mark in the US which ignited calls for a shut down in some states. Furthermore, lawmakers failed to reach an agreement on a new $1 trillion stimulus relief package intended to stimulate the economy. In spite of the greenback’s loss, it appreciated by 0.12 percent to sell at GHS5.68 on the interbank forex market. The year-to-date depreciation of the cedi thus widened to 2.54 percent.

The British Pound rebounded on account of the release of strong economic data in the UK, raising hopes of a potential recovery of the economy. The Purchasing Manager’s Index for July surged to 57.10 from 47.7 in June spurred by easing lockdown restriction. Retail sales for June also rose by 13.90 percent (month-on-month) following an uptick on consumer demand. The British Pound thus benefitted from these developments as it rose by 2.07 percent to exchange at GHS7.26 on the interbank currency market. The year-to-date appreciation of the cedi thus reduced to 0.78 percent.

The Euro was on the offensive as the bloc’s leaders finally reached a compromise on a relief package. Investors cheered to news of the EU leaders agreeing to a 750-billion-euro rescue package, comprising 390 billion euros of grant and 360 billion of loans to ease the economic burden on member countries affected by the covid-19 pandemic. The euro thus appreciated by 1.92 percent to sell at GHS6.61 on the interbank currency market. The year-to-date depreciation of the Cedi thus worsened to 5.99 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,224.73 3,215.63 -0.28 -0.47
DJIA 26,671.95 26,469.89 -0.76 -7.25
FTSE 100 6,290.30 6,123.82 -2.65 -18.81
NIKKEI 225 22,696.42 22,751.61 0.24 -3.83
FTSE/JSE All Share 55,911.80 55,645.65 -0.48 -2.52
NSE All Share 24,287.66 24,427.73 0.58 -8.99
Nairobi All Share 132.25 134.59 1.77 -19.12

Wallstreet tumbled in the trading week on account of renewed US-China geo-political tensions and downbeat third-quarter earnings. US tech giant - Intel is forecasted to have its earnings declining sharply following the impact of the novel virus on its business with similar impacts on other firms. The S&P 500 slipped by 0.28 percent to settle at an index level of 3,215.63 points. Likewise, the Dow Jones Industrial Average dipped by 0.76 percent to end the week at 26,469.89 points.

The London Stock Exchange closed in the red triggered by dovish commentary by EU's Chief Negotiator-Michael Barnier. His remarks that no compromise had been reached on outstanding trade issues weighed on the bourse as it casted a gloomy outlook on the future relationship between the UK and the Eurozone. The FTSE 100 thus declined by 2.65 percent in the trading week to close at 6,123.82points.

The Nikkei 225 closed higher buoyed by demand uptick for shares in the Paper & Pup, Railway & Bus and Real Estate sectors which lifted the benchmark index. The Nikkei 225 thus upturned by 0.24 percent to close at 22,751.61 points.

On the African equity market, the Nigerian All Share Index rose by 0.58 percent to close at 24,427.73 points. The Nairobi All Share Index recorded a weekly gain of 1.77 percent to settle at 134.59 points. The Johannesburg All Share Index, on the downside, recorded a week-on-week loss of 0.48 percent to settle at 55,645.65 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 43.14 43.34 0.46 -34.33
Gold $/ounce 1,810.00 1,897.50 4.83 24.58
Cocoa$/metric tonne 2,160.00 2,224.00 2.96 -12.44
Coffee $/pound 1.0105 1.084 7.27 -16.42
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil edged up on account of the release of positive economic data signalling demand build-up across the globe. The IHS Markit’s composite Purchasing Managers Index for the Eurozone rose to 47.5 in June compared to the 31.9 recorded in May whereas that for UK climbed to 47.6 as against the figure of 30 posted in May. On the back of these, Brent crude oil traded 0.46 percent higher at $43.34 per barrel.

Gold sustained its bullish run boosted by renewed US-China trade tensions which fuelled investors’ demand for the safe haven asset. Gold thus recorded its seventh consecutive weekly gain as it rose by 4.38 percent to trade at $1,897.50 per ounce.

Cocoa rose on the international commodities market following unfavourable climatic conditions in top grower-Ivory Coast which threatened the quality and quantity of the beans ahead of the harvest season. Cocoa thus soared by 2.96 percent to settle at $ 2,224.00 per metric tonne.

Coffee maintained its upward trajectory driven by a decline in Production from the world’s leading producer-Brazil on account of rising covid-19 cases and heightened political uncertainty. Coffee thus posted a gain of 7.27 percent to close at $1.08 per pound.

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