Weekly Highlights

• Producer Price Inflation settled at 9.60 percent.
• Yields on 91-Day and 182-Day T-Bills surged last Friday.
• Accra Bourse headed southwards on EGH woes.
• Ghana cedi depreciated against all three major trading currencies.
• Brent crude oil dropped on market imbalances.

Macroeconomic Update

Producer Price Inflation settled at 9.60 percent

The producer price inflation (PPI) for the month of September settled at 9.60 percent. This represents 60 basis points rise from the previous month’s reading of 9.00 percent. High input cost within the manufacturing sub-sector accounted for the rate hike recorded in the month under review. A PPI of 5.9 percent was recorded within the Manufacturing sub-sector as against the 4.0 percent rate for August 2020. Inflationary pressures within five sub-divisions including motor vehicles, trailers and semitrailers had rates, outstripping the sub-sector average of 5.9 percent. The Mining & Quarrying, on the other hand, was unchanged whereas the Utilities sub-sector witnessed moderation in September. The PPI for the Mining & Quarrying sub-sector eased by 6.1 percentage points from 37.9 percent in August to 31.8 percent in September 2020. The PPI for the Utilities sub-sector was unchanged at 5.8 percent.

Key Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 10.40
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 9.60
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 -3.2Q2
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 7.2 7.9
Public Debt (% of GDP) 69.8 57.6 63.00 n/a 68.3
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 4.0
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
Oct 26 – 30 14.06 14.12 17.00 18.50 19.00 19.85
Oct 19 – 23 14.04 14.09 17.00 18.50 19.00 19.85
Oct 12 – 16 14.05 14.11 16.98 18.50 19.00 19.25
2020 Yr. 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.

Interest rates rose marginally on the Government of Ghana treasury securities. The yield on the 91-Day T-Bill upped by 2 basis points to settle at 14.06 percent. Interest rate on the 182-Day T-Bill, similarly, surged by 3 basis points to 14.12 percent. Yields on the 364-Day T-Bill, Government treasury notes and bonds were unchanged as they were not scheduled for the week’s auction.

Results of Auction held on 23rd October, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 870.23 870.23 14.0552
182-Day T-Bill 203.16 203.16 14.1177

Government accepted all the GHS1,073.39 million worth of bids tendered by investors. The week’s target of GHS1,027.00 million was slightly exceeded and higher than the GHS819.62 million worth of bids accepted at the previous auction. The 91-Day T-Bill was the most bids accepted, constituting 81.07 percent of the overall bids raised at the auction. Government anticipates raising a total of GHS709.00 million from the sale of the 91-Day, 182-Day, and 364-Day T-Bills next Friday.

The yield curve kept its upward sloping nature despite the rate adjustment recorded at the auction. The persisting risk aversion influencing high demand for safe-haven assets underpins the normality of the yield curve. This normality is expected to be sustained despite the gradual rebound in business and consumer sentiment in the country.

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 -18.36
GSE-FSI -19.93 49.51 -6.79 -6.23 -18.80

The GSE market indices dropped further as the significant price decline in Ecobank Ghana Ltd nullified price surges in six advancers. The benchmark Composite Index thus went down by 0.18 percent to settle at 1,842.85 points, representing a year-to-date loss of 18.36. The GSE Financial Stocks Index, similarly, shed 1.63 percent to close at 1,640.05 points, corresponding to a year-to-date loss of 18.80 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 10.69 6.65 -37.77
Total Value Traded (GHS M) 8.09 24.75 205.93
Market Cap (GHS M) 53,271.69 53,173.78 -0.18

Market outturn dwindled in comparison to the previous week’s outturn. Total traded shares dropped by 37.77 percent to 6.65 million from a previous week’s volume of 10.69 million. In value terms, GHS24.75 million worth of shares were traded in the week-under-review as against the GHS8.09 million traded a week earlier. GCB Bank Ltd dominated market activity in terms of volume by 85.74 percent. The GSE market capitalization also declined by 0.18 percent to GHS53,173.78 million.

Stock Price Movements
At the paring of the week’s opening and closing prices, seven (7) equities appeared on the mover’s list; 6 advancers and 1 laggard. New Gold Ltd topped the advancers with GHS17.60 rise to trade at GHS108.50 per share. GCB Bank Ltd and Standard Chartered Bank Ltd followed with 15 pesewas and 10 pesewas gains to settle at GHS3.85 and GHS15.10 per share, respectively. MTN Ghana Ltd, Société Générale Ghana Ltd and Ecobank Transnational Incorporated also gained a pesewa each to close at 61 pesewas, 65 pesewas and 7 pesewas, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
MTNGH 0.70 0.61 0.62 0.01 1.64
SOGEGH 0.72 0.64 0.65 0.01 1.56
ETI 0.08 0.06 0.07 0.01 16.67
SCB 18.40 15.00 15.10 0.10 0.67
GCB 5.10 3.70 3.85 0.15 4.05
GLD 54.00 90.90 108.50 17.60 19.36

On the flip side, Ecobank Ghana Ltd shed GHS1.50 to trade at GHS5.50 per share.
Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
EGH 8.09 7.00 5.50 -1.50 -21.43

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7047 5.7105 CAD 4.3406 4.3448
GBP 7.4458 7.4539 CFA 97.0221 97.1184
EUR 6.7542 6.7609 JPY 0.0544 0.0545
AUD 4.0565 4.0609 ZAR 0.3518 0.3521
NGN 66.6655 66.9283 CNY 0.8535 0.8540
Source: Bank of Ghana 23.10.2020

The Ghana Cedi closed the interbank forex trading losing against the three major trading currencies. The US dollar was on the defensive as investors adopted a more cautious mood ahead of US presidential election next month. In the week’s presidential debate, Trump was noted to have adopted a more restrained tone than the first debate on his handling of the COVID-19 pandemic and personal slights causing a marginal shift towards his favour. On the other hand, a poll predicting a win for Biden as he is expected to spend more on coronavirus aid than Trump, clouded the market with uncertainties. Despite the US dollar’s outturn, it appreciated by 0.04 percent to trade at GHS5.71 on the local currency market. The year-to-date depreciation of the cedi thus increased to 3.05 percent.

The British pound closed in the gains on the international forex market as UK Government and the European Union entered an intense meeting to finalise trade negotiations between the two parties. The speculation that the UK Government was willing to compromise to have a deal with the bloc sparked the demand for the pound sterling. The British pound thus appreciated by 1.04 percent to trade at GHS7.45 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 1.79 percent.

The Euro upped its value, benefiting from the greenbacks fall and the issuance of Governmental treasury securities aimed at expanding Eurozone’s labour market. In the trading week, the newly 10-Year and 20-Year “social” bonds issuance recorded the highest demand ever for a bond sale totalling 233 billion euros to fund the SURE unemployment relief scheme. The Euro thus surged by 1.08 percent to trade at GHS6.76 on Friday. The year-to-date depreciation of the cedi thus moved to 8.10 percent.

International Market
Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,483.81 3,465.39 -0.53 7.26
DJIA 28,606.31 28,335.57 -0.95 -0.71
FTSE 100 5,919.58 5,860.28 -1.00 -22.30
NIKKEI 225 23,410.63 23,516.59 0.45 -0.59
FTSE/JSEAllShare 55,047.26 55,339.58 0.53 -3.06
NSE All Share 28,659.45 28,697.06 0.13 6.91
Nairobi All Share 139.65 141.21 1.12 -15.14

US Stocks market failed to sustain its upward rally for the third time as it negatively reacted to the prolong implementation of COVID-19 stimulus package in the US. US’s Treasury Secretary – Steven Mnuchin speculation about the lack of urgency on the part of US House’s Speaker – Nancy Pelosi to agree on key issues for a smooth implementation of the stimulus package affected market sentiment. The S&P 500 thus went down by 0.53 percent to settle at 3,465.39 points. The Dow Jones Industrial Average also dwindled by 0.95 percent to close at 28,335.57 points.

The London Stock Exchange closed the week’s trade as the pound’s resurgence coupled with COVID-19 threats on its economy dimmed risk taking sentiment. The pound’s advancement negatively affected share prices as it relatively became expensive for non-pound holders. The FTSE 100 thus recorded 1.00 percent decline to close at 5,860.28 points.

The Japanese Stock Exchange posted a weekly gain after the week’s trade as investors drifted the Asian market following happenings in other advanced economies. This sparked high demand for stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus saw 0.45 percent rise to settle at 23,516.59 points.

On the African equity market, the Johannesburg All Shares Index upped by 0.53 percent to 55,339.58 points. The Nigerian All Share Index also posted a week-on-week gain of 0.13 percent to 28,697.06 points. The Nairobi All Share Index, similarly, finished 1.12 percent higher at 141.21 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 42.93 41.77 -2.70 -36.71
Gold $/ounce 1,906.40 1,905.20 -0.06 25.09
Cocoa$/metric tonne 2,361.00 2,479.00 5.00 -2.40
Coffee $/pound 1.0725 1.056 -1.54 -18.58
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil trimmed its unit price on the global commodities market as supply continued to outstrip demand of the commodity. Data on daily crude oil production in Libyan has surged to about 500,000 barrels and is tipped to increase further by end of October due to the political unrest. This, adding to inventory build-up in the US and OPEC’s decision to lift the production cut by 2 million barrels per day in January 2021 amidst the dwindling demand outlook, affected the pricing on the global market. Brent crude oil thus dropped by $1.16 to trade at $41.77 per metric tonne.

Gold, despite closing the last trading session in the gains, ended the trading week in the red. The upward rally characterising the yellow metal was suddenly erased as the US Government and the Congress paused the Covid-19 stimulus discussion over unresolved challenges. Gold thus shed $1.20 to close at $1,905.20 per ounce.

Cocoa edged higher on the international commodities market despite supply glut on the commodities market as Ivory Coast experiences bumper harvest. The price gains recorded in the trading week is attributed to speculations that the resurgence in COVID-19 case could cut export from top growers into the European countries. Cocoa thus advanced by $129.00 to trade at $2,490.00 per metric tonne.

Coffee lost marginally following opposing climatic effects in two top growers, Brazil and Vietnam. Brazil’s production of the soft crop was limited by inadequate rainfall, sparking short covering of the commodity in the region, whereas Vietnam witnessed series of rainfall, boosting the production outlook of the crop. Coffee thus fell by a cent to settle at 1.06 per pound.

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