Weekly Highlights

• Business and Consumer sentiment improved in Q1 of 2021 – BOG
• Banking sector sustained its sterling performance in April 2021 – BOG.
• Yield on 91-Day T-Bills slashed by 7 basis points.
• Accra Bourse sustained its uptrend on the back of 5 advancers.
• Ghana cedi advanced against the Euro but lost to both the US Dollar and British pound.
• Wall Street ended bullish on investors expectation of policy reversal by the US Fed.
• Brent crude oil upped its unit price as OPEC curbs global supply.

Macroeconomic Update

Business and Consumer sentiment improved in Q1 of 2021 – BOG
The gradual easing of uncertainties around the COVID-19 pandemic and the 2017-2019 financial sector clean-up has contributed to restoration of investor and consumer confidence in the domestic economy. The Bank of Ghana’s Composite Index of Economic Activity saw a strong rebound of an annual growth of 26.08 percent in the 1st quarter of 2021, from a contraction of 1.9 percent a year ago. This was supported by the improving domestic consumption, rising construction activities, international trading activities, resumption of industrial production activities and air passage activities. Dwindling inflation outlook of the economy further contributed to the improving confidence in the domestic economy.

On the back of these developments, the Bank of Ghana Confidence Survey on both the Consumer and Business rose in December 2020 to (102.8 points;101.1 points) from April 2020’s figures of (84.1 points and 77.2 points) respectively. Following, the reaction towards the imposition and subsequent implementation of new taxes, confidence levels across the consumer and business have subsequently eased marginally to (93.2 points and96.9 points) respectively in April 2021.

Banking sector sustained its sterling performance in April 2021 – BOG
According to the release from the Monetary Policy Committee (MPC) meeting, Ghana’s banking sector maintained its resilient performance, with strong growth in total assets, deposits, and investment in April 2021. The banking sector’s assets base saw a growth of 16.4 percent to GHS155.7 billion, largely accounted by significant rise in bank’s investment in government securities by 34.9 percent to GHS73.3 billion.

Bank’s total deposits also saw an annual growth of 24.2 percent to GHS104.9 billion, with an Industry Capital Adequacy Ratio of 21.8 percent, far above the regulatory minimum threshold of 11.5 percent. Bank’s operation income saw a 16.8 percent expansion, higher than the 15.2 percent recorded in April 2020. The profit before tax bounced back significantly in April 2020 by 39.6 percent to GHS2.3 billion, as compared to a marginal growth of 7.5 percent in April 2020.

Despite the general positive outlook of the sector, non-performing loan widened to 15.5 percent in April 2021 from a 15.0 percent recorded a year ago attributed to pandemic-induced repayment challenges that confronted the sector. The net interest income also saw a moderation from the 18.08 percent growth in April 2020 to 18.4 percent in April 2021 at a monetary value of GHS4.1 billion. The sector is tipped to sustain its bullish outlook following its improved liquidity levels and ability to take on higher business transactions.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8.00 8.50
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 11.10
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 13.50
GDP Growth (y-o-y %) 6.3 6.5 0.4 5.00 n/a
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 2.6 Q1
Public Debt (% ofGDP) 57.6 63.00 68.3 n/a n/a
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 n/a
Source: BOG; MOFEP; GSS.

Government of Ghana Treasury Securities

Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Jun07 – Jun11 12.71 13.43 16.49 17.60 17.70 18.30
May31- Jun04 12.78 13.51 16.49 17.60 17.70 18.30
May 24 – 28 12.76 13.54 16.42 17.60 17.70 18.30
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.

At the close of the week’s auction, interest rates on the GoG treasury securities witnessed missed adjustment. The yield on the 91-Day T-Bill dropped by 7 basis points to 12.71 percent, with that on the 182-Day T-Bill also inching down by 8 basis points to 13.43 percent. The interest rates on the 364-Day T-Bill and the Government of Ghana Treasury Notes and Bonds, however, remained unchanged as they were not scheduled for the week’s auction.

Results of Auction held on 4th June, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 1,142.33 1,142.33 12.7060
182-Day T-Bill 99.43 99.43 13.4298

At the auction, the Government accepted all the GHS1,241.76 million worth of bids tendered by investors. This outstripped the GHS1,281.00 million target s by the Government at the week’s auction. The 91-Day T-Bill dominated Government purchase with 91.55 percent composition. Government anticipates raising GHS1,171.00 million worth of bids from investors at the upcoming auction.

The continuous moderation in yields on Government treasury securities, coupled with the recently adjusted monetary policy rate from 14.5 percent to 13.5 percent, is imperative to improve the investment climate of the domestic economy. Efforts tailored at ensuring that Banks respond to the policy rate cut, through the reduction of their lending rates will be very beneficial in the restoration of economic activities, as it will increase the level of private sector participation.

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 34.05
GSE-FSI 49.51 -6.79 -6.23 -11.73 7.27

The first trading week of June saw a positive closure of the market indices. This follows improved demand for stocks in MTN Ghana Ltd and in some financial stocks on the Bourse, which helped overturn recent downward pressures. The GSE Composite Index thus ended with a week-on-week gain of 7.50 percent to settle at 2,602.76 points, corresponding to a year-to-date gain of 34.05 percent. The GSE Financial Stocks Index similarly posted a weekly gain of 0.49 percent as it settled at 1,912.30 points to lift its year-to-date return to 7.27 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 20.62 4.59 -77.73
Total Value Traded (GHS M) 19.54 6.13 -68.60
Market Cap (GHS M) 59,333.16 61,234.21 3.20

Despite the market overturning the previous week’s bearish closure, total shares that exchanged hands dwindled significantly. A total of 4.59 stocks valued at GHS6.13 traded, representing 77.73 percent moderation from the previous week’s outturn of 20.62 million worth GHS19.54 million, was recorded. MTN Ghana Ltd was the most traded stocks, with 81.06 percent contribution to the overall traded volume. Market Capitalsiation further rose by 3.20 to GHS61,234.21 million.

Stock Price Movements

The week’s trading saw five (5) equities altering their week’s opening prices with no laggard. Enterprise Group Ltd was the best performer. It appreciated by 22 pesewas to trade at GHS1.75 per share. MTN Ghana Ltd and Standard Chartered Bank Ltd had their share prices rising by 15 pesewas and 7 pesewas to close at GHS1.15 and GHS18.57 per share, respectively. Total Petroleum Ltd and Société Générale Ghana Ltd saw price lifts of 3 pesewas and a pesewa to end the week’s trade at GHS3.30 and 88 pesewas per share, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
EGL 1.4 1.53 1.75 0.22 25.00
MTNGH 0.64 1.00 1.15 0.15 79.69
SCB 16.31 18.50 18.57 0.07 13.86
SOGEGH 0.64 0.87 0.88 0.01 37.50
TOTAL 2.83 3.27 3.30 0.03 16.61

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7441 5.7499 CAD 4.7498 4.7543
GBP 8.1383 8.1470 CFA 93.7604 93.8529
EUR 6.9892 6.9961 JPY 0.0525 0.0525
AUD 4.4459 4.4515 ZAR 0.4264 0.4268
NGN 71.3416 71.5156 CNY 0.8984 0.8992
Source: Bank of Ghana 04.05.2021

The Ghana Cedi advanced against the Euro but lost to the US dollar and the British pound on the interbank currency market. The US dollar posted a strong resurgence on the international currency market as consistent improvement in US labour market sparked concerns about a potential pullback of stimulus measures. Jobless claims dipped for the 5th consecutive time to 385,000 in the week ended 29th May 2021 which buoyed the value of the greenback. The US dollar thus clocked a week-on-week appreciation of 0.09 percent to at GHS5.75 on the interbank currency market. The year-to-date appreciation of the cedi thus reduced to 0.23 percent.

The British pound gained support after the release of upbeat data from the services and manufacturing sectors. Data on UK’s service sector further gained momentum, recorded its fastest expansion in two years, as it rose to 62.9 points in May from April’s reading of 61.0 points. The pound’s gain was further supported by stronger production in UK’s economy as its PMI jumped to 65.6 in May from a previous reading of 60.9 percent. The pound thus gained 0.03 percent as its selling price rose to GHS8.15. The year-to-date return of the pound thus rose to3.29 percent.

The Euro received backing from bullish data emerging from the Eurozone during the week’s trading. Consumer Price Inflation in the region accelerated to 2 percent in May, beating an expectation of 1.9 percent and a previous reading of 1.6 percent. Inflation at the producer end also witnessed growth of 7.6 percent in April from the 4.3 percent recorded March 2021. Other bullish statistics emerging from the bloc were manufacturing purchasing manager’s index of 63.1 points against a previous reading of 62.9 percent. Despite these support to the single currency, it depreciated by 0.02 percent to the Ghana Cedi at a selling price of GHS7.00. The year-to-date depreciation of the cedi thus rose to 1.02 percent.

International Market
Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,204.11 4,229.89 0.61 12.61
DJIA 34,529.45 34,756.39 0.66 13.56
FTSE 100 7,022.61 7,069.04 0.66 9.42
NIKKEI 225 29,149.41 28,941.52 -0.71 5.46
FTSE/JSEAllShare 67,554.86 67,825.02 0.40 14.17
NSE All Share 38,256.99 38,726.10 1.23 -3.84
Nairobi All Share 172.69 169.87 -1.63 11.68

Wallstreet upped its upward rally driven by bullish labour market and positive inflation outlook as investors believed such developments could alter recent policy stance of the US Fed. Shares within the technology segments were the most beneficial of this development. The S&P 500 thus finished with a week-on-week gain of 0.61 percent to settle at 4,229.89 points. The Dow Jones Industrial Average also recorded a week-on-week rise of 0.66 percent to settle at 34,756.39 points.

The London Stock Exchange finished on a positive, note supported by energy sector stocks which benefited from recent upward rally on the international commodities market. The FSTE 100 thus finished with a week-on-week appreciation of 0.66 percent to settle at an index level of 7,069.04 points.

The Japanese Stock Exchange closed in the red, as investors redirected their attention onto positive developments in the US market. This shift negatively affected stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors to weigh on the Bourse. The Nikkei 225 thus went down by 0.71 percent to close at 28,941.52 points.

On the African equity market, the Johannesburg All Share Index sustained its uptrend with 0.40 percent gains as it settled at 67,825.02 points. The Nairobi All Share Index saw a rebound of 1.23 percent to close at 38,726.10 points. The Nairobi All Share Index, however, suffered a weekly decline of 1.63 percent to close at 169.87 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 69.63 71.89 3.25% 38.78%
Gold $/ounce 1,905.30 1,892.00 -0.70% -0.16%
Cocoa$/metric tonne 2,412.00 2,409.00 -0.12% -7.45%
Coffee $/pound 1.6235 1.6165 -0.43% 26.04%
Source:www.bloomberg.com, & www.investing.com

Brent crude oil crossed the $70.00 per barrel mark on the international commodities market, following the decision by the Organisation of the Petroleum Exporting Countries (OPEC), to restrain the supply of the commodity. The black gold was further supported on the bullish demand outlook as India’s COVID-19 cases are brought under control. Brent crude oil gained $2.26 to trade at $71.89 per barrel.

Gold went down as investors digested the implication of the improving labour market statistics in the US data on the policy directions of US Fed. US labour market data proxied by unemployment filling dropped for the 5th consecutive week, as economic activities improved in the labour market. This has raised concerns about a potential pullback of stimulus measures, hence, affecting the yellow metal. Gold thus shed $13.30 to trade at $1,892.00 per ounce.

Coffee lowered its unit price on the international commodities market, as investors took advantage of the production prospect of the crop to lower the buying price. Coffee’s production is tipped to increase significantly in Brazil on the back of improving climatic conditions and higher export of about 4.1 percent in April 2021 in the region. Coffee thus went down by a cent to trade at $1.62 per pound.

Cocoa suffered the week’s trade on account of abundant global supply as improving climatic conditions in Ivory Coast weighed on the commodity price. The International Cocoa Organization has raised the production outlook by 6.3 percent to a 5.02 million metric tonne, following the higher production in Ivory Coast. Cocoa thus recorded a weekly decline of $3.00 to trade at $2,409.00 per metric tonne.