Weekly Highlights

• Inflation upped to 10.3 percent in February 2021.
• Ghana’s economy to grow by 5 percent in 2021.
• Interest rates on short-dated treasury securities dropped further.
• GSE Indices ended mixed with financial stocks index trimming year-to-date returns.
• Ghana cedi lost footing against the three major trading currencies.
• London Stock Exchange ended positive as Banking and Energy sector stocks subdued threats from the mining and housing sectors.
• Cocoa prices fall on the international commodities market on account of increased export in Ivory Coast.

Macroeconomic update

Inflation upped to 10.3 percent in February 2021

February’s inflation settled at 10.3 percent, representing 40 basis points rise over the January’s rate of 9.90 percent. The upsurge hung on inflationary pressures within the Non-Food subsector of the economy, largely due to high housing cost in the country. Housing recorded the highest rate of 23.4 percent under the Non-Food segment, as compared to the 19.0 percent recorded in January 2021. On account of this, Non-Food Inflation for February 2021 shot up by 110 basis points from 7.7 percent to settle at 8.80 percent. Food Inflation, on the other hand, dropped by 50 basis points from 12.80 percent in January 2021, to 12.30 percent, following the positive impact of planting for food and jobs initiative. The contribution of Food inflation to the overall inflation sustained the downtrend, easing from 57.0 percent in January 2021 to 52.60 percent in February 2020.

Across the regional levels, inflation was at its highest in the Greater Accra Region at 14.8 percent with non-food inflation component of 17.2 percent against Food inflation of 11.6 percent. Ashanti region recorded the second highest of 11.5 percent, with the least inflation readings coming from the Volta and Upper West Regions of 4.4 percent and 4.8 percent, respectively. Presented below is the 1-year trend analysis of the CPI.

Ghana’s economy to grow by 5 percent in 2021
Ghana’s economy is anticipated to expand by 5 percent in 2021 on account of policy measures intended to be adopted by the Government to restore economic activities. This was made known by the Government of Ghana – President Nana Addo Dankwa Akuffo Addoo – during the State of the Nation Address presented to the legislative arm of Government in the week under review. The growth projection aligns with others by the World Bank and the International Monetary Fund, which puts the growth of the sub-Saharan region at 3.2 percent.

The variance is anticipated to be addressed by the effective implementation of the GHS100 billion Ghana Cares “Obaatampa Programme,” which aims at transforming, revitalising and modernising the economy for a sustainable growth within the next three years. This will revert the poor economic outturn witnessed in 2020, following threats of the COVID-19 pandemic on most sectors of the economy.

In 2020, the 6.8 percent growth projection was downwardly reviewed to 0.9 percent, following two consecutive growth contractions of 3.2 percent in the second and 1.1 percent in the third quarters, in 2020. During this period of the pandemic, revenue shortened by about GHS13.5 billion, with Government expenditures rising significantly to GHS25.00 billion to put the fiscal deficit at 11.4 percent, breaking the fiscal responsibility rule that stipulates that fiscal deficit should not exceed 5 percent of GDP.

Key Ghana Economic Data

Indicator 2018 2019 2020 2020 2021
Target Actual Actual
Inflation CPI (y-o-y %) 9.40 7.90 11.1 10.40 9.90
Inflation PPI (y-o-y %) 4.40 13.00 n/a 7.00 9.10
Monetary Policy Rate (%) 17.0 16.00 n/a 14.50 14.50
GDP Growth (y-o-y %) 6.3 6.5 0.9 -1.1 Q3 n/a
Budget Deficit (% of GDP 3.8 4.5Sep 7.2 11.4 n/a
Public Debt (% of GDP) 57.6 63.00 n/a 68.3 n/a
Fx. Reserves (M. Cover) 3.7 4.1 ?4.0 4.0 n/a
Source: BOG; MOFEP; GSS. * represents provisional estimate ** data yet to be released by MoF

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Mar 15 – 19 13.00 13.85 16.67 17.60 19.25 18.30
Mar 08 – 12 13.05 13.86 16.76 17.60 19.25 18.30
Mar 01 – 05 13.27 13.89 16.80 17.60 19.25 19.85
2021 Yr. Open 14.09 14.12 17.00 18.50 19.25 19.85
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rate cuts was once again witnessed after the week’s auction. The yield on the 91-Day T-Bill dropped by 5 basis points to settle at 13.00 percent. That on the 182-Day T-Bill moderated by a basis point to 13.85 percent. The yield on the 364-Day T-Bill also fell by 9 basis points to settle at 16.67 percent. Interest rates on the Government of Ghana treasury Notes and Bonds were, however, unaltered as they were not part of the week’s issuance.

Results of Auction held on 12th March, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 984.53 714.98 12.9996
182-Day T-Bill 681.19 674.25 13.8491
364-Day T-Bill 136.86 95.02 16.6661

Government accepted a total of GHS1,484.25 million out of the GHS1,802.58 million bids tendered by investors at the auction. The week’s target of GHS1,100.00 million was exceeded with the 91-Day T-Bill constituting the most accepted bids by the Government (i.e., 48.17 percent). An amount of GHS890.00 million is expected to be raised at the upcoming auction by the Government from the sale of both the 91-Day, and 182-Day T-Bills.

In spite of the relative higher yield on the 3-Year Bond over the 5-year Bond, the general positive nature of the yield curve was sustained. The continuous moderation witnessed in recent times is necessary for a cut in policy rate at the next policy rate review by the Bank of Ghana. A decline in the policy rate will contribute to boosting economic recovery, as it will reduce average lending cost to encourage spending and private sector investment.
Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2017 2018 2019 2020 2021
GSE-CI 52.73 -0.29 -12.25 -13.98 14.08
GSE-FSI 49.51 -6.79 -6.23 -11.73 4.11

The Ghana Stocks Exchange ended mixed with MTN supporting the upward rally in the GSE Composite Index but CAL Bank Ltd eroding some gains from the GSE Financial Stocks Index. At the closing bell, the GSE Composite Index thus made a week-on-week gain of 31 basis points as it settled at 2,214.90 points, corresponding to a year-to-date return of 14.08 percent. The GSE Financial Stocks Index, however, declined by 47 basis points as it settled at 1,856.06 points, reducing its year-to-date return to 4.11 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 37.37 7.77 -79.21
Total Value Traded (GHS M) 29.99 6.56 -78.11
Market Cap (GHS M) 57,060.29 57,133.07 0.13

At the close of the week’s trade, a total of volume of 7.77 million shares valued at GHS6.56 million exchanged hands, representing 79.21 percent decline over the previous week’s outturn of 37.37 million worth GHS29.99 million. MTN led the activity chart with 99.36 percent share of the total traded volume. Market Capitalization, however, advanced by 0.13 percent to settle at GHS57,133.07 million.

Stock Price Movements

At the paring of the week’s opening and closing prices, a total of two (2) equities altered their share prices. MTN Ghana Ltd added a pesewa to trade at 84 pesewas per share. CAL Bank Ltd, on the flip side, shed 8 pesewas to trade at 75 pesewas per share.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
MTNGH 0.64 0.83 0.84 0.01 31.25
CAL 0.69 0.83 0.75 -0.08 8.70

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7236 5.7294 CAD 4.5810 4.5857
GBP 7.9536 7.9621 CFA 95.9044 95.9984
EUR 6.8330 6.8397 JPY 0.0525 0.0526
AUD 4.4341 4.4397 ZAR 0.3824 0.3828
NGN 71.1237 71.2983 CNY 0.8809 0.8818
Source: Bank of Ghana 12.03.2021

The interbank currency market saw the Ghana Cedi losing grounds against the three major trading currencies. The US Dollar gained support from series of upbeat economic data from the US economy as labour market increased their employment level, coupled with unprecedent rise in consumer spending. Unemployment filling sustained a downtrend following the successful vaccination of the US population which resulted in growth in the labour market participation. Unemployment benefits filling for the week, ended 5th March, dropped to 712,000 claims, from a previous week’s outturn of 754,000, beating a forecast of 725,000. Consumer Prices for February 2021 increased solidly on the back of rising gasoline prices on the international markets. The US CPI for February 2021 saw a monthly rise of 0.4 percent to 1.7 percent from a January’s rate of 1.4 percent. These, coupled with the passage and approval of the $1.9 trillion stimulus package into law, closed the dollar bullish. The US dollar thus appreciated by 0.01 percent as its selling price rose to GHS5.73 on the interbank currency market. The year-to-date appreciation of the cedi thus stood at 0.59 percent.

The British pound came under pressure on the international forex market following market anticipation of economic contraction in the UK for January 2021. Projections showing 4.9 percent contraction in economic growth in January 2021, on account of the renewed lockdown during that time to slow the spread of the virus, affected market sentiment, as it nullified the 1.2 percent growth rate recorded in December 2020. In spite of this, the British pound appreciated by 0.55 percent as its selling price rose to GHS7.96 on the interbank currency market. The year-to-date depreciation of the cedi thus increased to 1.05 percent.

The Euro upped its value on the international forex market, lifted by expectation-beating data from Eurozone’s largest economy. Germany’s exports grew by 1.4 percent on month-on-month basis in January 2021, faster than the 0.4 percent rise in December 2020 and beating a forecast contraction of 1.2 percent. This was a result of dwindling importation by 4.7 percent in February far outstripping the 0.5 percent drop expected. Factory activities also improved in Germany – Eurozone’s largest economy to offer support to the shared currency. Factory orders grew by 1.4 percent month-on-month basis in January to help reverse a contraction of 2.2 percent recorded in December 2020. These developments aided the upgrading of consume confidence to its highest in a year for the entire Eurozone. A 5.0 points confidence level was recorded in February 2021 from a negative 0.2 points in the previous months. The Euro thus appreciated by 0.20 percent as its selling price rose to GHS6.84 on the interbank currency market. Thus, the year-to-date appreciation of the cedi reduced to 3.33 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,841.94 3,943.34 2.64 4.99
DJIA 31,496.30 32,778.64 4.07 7.10
FTSE 100 6,630.52 6,761.47 1.97 4.66
NIKKEI 225 28,864.32 29,717.83 2.96 8.28
FTSE/JSEAllShare 68,271.19 68,209.86 -0.09 14.81
NSE All Share 39,331.61 38,648.48 -1.74 -4.03
Nairobi All Share 161.67 162.08 0.25 6.55

The US equity market closed positive, the fifth consecutive weekly gain as investors increased their demand for shares, tipped to benefit from the recent signs of economic recovery. The passage of the 1.9 trillion stimulus package by Joe Biden, coupled with consumers’ sentiments, which jumped to its highest in twelve months, from a previous reading of 76.8 to 83 points led economists to forecast a 7 percent to 9 percent economic expansion for the US in 2021. The S&P 500 thus finished with a weekly gain of 2.64 points to settle at 3,943.34 points. The Dow Jones Industrial Average also ended with a weekly gain of 4.07 points to settle at 32,778.64 points.

The London Stock Exchange finished on a positive note as rising demand for banking and energy sector stocks helped subdue losses emerging from the mining and home-building sectors. Barclays Bank Plc and Standard Chartered Plc were up more than 2 percent each, following improving sentiment in the UK as Government works to vaccinate the entire population. The FTSE 100 thus rose by 1.97 percent to settle at 6,761.47 points.

The Japanese Stock Exchange gained, supported by demand pressures for stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors. Rakuten Incorporated rose by 8.94 percent, Cyber Agent Incorporated and SUMCO Incorporated Ltd also saw 8.19 percent and 7.69 percent rise, respectively, to lift the Nikkei 225 index. At the closing bell, the Nikkei 225 Index, thus ended with a week-on-week gain of 2.96 percent to settle at 29,717.83 points.

On the African equity market, the Nairobi All Share Index clocked a positive week-on-week gain of 0.25 percent to settle at 162.08 points. The Johannesburg All Share Index, however, headed southwards after losing 0.09 percent to settle at 68,209.89 points. The Nigerian All Share Index also recorded a weekly loss of 1.74 percent to settle at 38,648.48 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 69.36 69.22 -0.20 33.63
Gold $/ounce 1,698.50 1,719.80 1.25 -9.25
Cocoa$/metric tonne 2,706.00 2,574.00 -4.88 -1.11
Coffee $/pound 1.2875 1.3245 2.87 3.27
Source:www.bloomberg.com, & www.investing.com -

Brent Crude Oil snapped seven consecutive weekly gains last Friday, as last-minute data on oil production from the United States for the week ended 5th March 2021 beat investors’ expectation. Crude oil production jumped by 900,000 to 10.9 million barrels to offset attempts by producers to control availability of the energy commodity on the international markets. This erased previous day’s rally, stemmed from the
decision by OPEC and its allies not to implement the production cut easing initiative and a forecast by the Organization of Petroleum Exporting Countries of a stronger demand in the second half of 2021. Brent Crude Oil thus shed 14 cents to trade at $69.22 per barrel.

Gold finished the trading week in the gains on account of falling yields on US Government treasury securities. The yield on the US 10-Year Treasury Note fell by 2 basis points to 1.518 percent whereas that on the 30-Year Treasury Bond also dropped nearly 2 basis points to 2.241 percent, to ease recent investor appetite for Government bonds. Gold thus gained $21.30 to trade at $1,719.80 per ounce.

Cocoa lost value on the international commodities market, following reports of oversupply of the commodity in Ivory Coast and projections of higher production of the beans in 2021. Data on cocoa deliveries to Ivorian Ports for export between October 2020 to February 2021 upped by 0.6 percent at 1.69 million metric tonnes. Global production by the International Cocoa Organization (ICCO) is also projected to increase by 2.5 percent to 4.8 million metric tonnes in 2021. Cocoa thus went down by $132.00, to trade at $2,574.00 per metric tonne.

Coffee advanced on growing demand optimism on the international commodities market, following the easing of new infection cases in high demand economies. Consumption of the soft crop in the United States of America, one of the world’s largest consumer, is projected to rebound, as drop in infections, is expected to foster the reopening of restaurants and coffee shops. Coffee thus added 4 cents to trade at $1.32 per pound.

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