• Headline inflation hit 7.8% for the month of June 2021.
• The GSE recorded a decline in investor returns.
• Ghana cedi lost against the dollar and the pound sterling.
• Wall Street shed points in its major indices.
• Coffee lifted in value, as global supply was threatened by severe drought in top grower, Brazil.

Macroeconomic Update

Consumer Price Inflation moves up to 7.8 percent for June 2021.

Consumer Price Inflation (CPI) for the month of June stood at 7.8 percent (year-on-year), up from the 7.5 percent recorded in May 2021, with month-on-month inflation between May and June settling at 1.3 percent. The 0.3 percent uptick in the headline inflation is a result of higher adjustments in the Food and Transport sub-sectors of the economy, on the back of 13 percent hike in Transport fares, taking effect in June 2021. Housing, Water, Electricity, Gas recorded the highest inflation of 14.2 percent despite dropping from the 19.9 percent seen in the month of May 2021. Inflation for Food jumped by 29.4 percent, bringing the gross month-on-month Food inflation to 1.8 percent, above the overall average month-on-month inflation. Average year-on-year Non-Food inflation dipped to 8.2 percent compared to the 9.2 percent recorded in May 2021. At the regional level, Greater Accra and the Western Regions recorded the highest and least CPI of 12.5 percent and 1.1 percent, respectively. The Upper West Region recorded the highest month-on-month inflation of 4.4 percent. Illustrated below is the trend of the CPI between June 2020 and June 2021.

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 7.80
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 11.80
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 3.1
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 2.6 Q1
Public Debt (% of GDP) 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
Jul 19 – Jul 23 12.56 13.36 16.32 17.60 17.70 18.80
Jul 12 – Jul 16 12.56 13.37 16.32 17.60 17.70 18.80
Jul 05 – Jul 09 12.59 13.38 16.33 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.

Interest rates on GOG Treasury securities registered minimal declines at the close of Friday’s auction. The yield on the 91-Day T-Bill remained at 12.56 percent while 182-Day Bill shed a basis point to settle at 13.36 percent. Yields on the GoG Bonds and Treasury Notes also ended the week unchanged, as they were not scheduled for the week’s auction.

Results of Auction held on 16th July, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 745.99 745.99 12.56
182-Day T-Bill 150.68 150.68 13.36

At the close of the last auction, Government took all the GHS 896.67 million worth of bids tendered in by dealers for the 91-Day and 182-Day Bills. The total bids fell short of Government’s target for the week by 30 percent, as investors were poised for the freshly issued 10-year FXR bond. The sale of the 91-Day security held up its dominance at the auction, as it constituted more than 80 percent of total bids accepted by Government. At the upcoming auction, Government seeks to borrow a total of GHS1,019.00 million through the sale of the 91, 182 and 364-Day Bills.

The yield curve firmed up its normality with marginal ease in rates at the short-dated ends. This trend is expected to continue due to the policy intent of the central bank to reduce the frequency of interest payment, whiles wooing investor to bid for the long-dated instruments, given their favourable return potential. This development is projected to aid the private sector’s contribution to economic development, as it seeks to results in cheaper cost of capital.

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 36.40
GSE-FSI 49.51 -6.79 -6.23 -11.73 6.05

The Stock market shed its year-to-date performance, as the GSE Composite Index declined by 0.16 percentage points to close the week at 2,641.31 points, representing a 36.40 percent return to investors. The GSE Financial Stock Index however remained unchanged at an index level of 1,890.61 points with a year-to-date return of 6.05 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 2.66 2.46 -6.96
Total Value Traded (GHS M) 6.10 2.91 -52.33
Market Cap (GHS M) 61,568.25 61,524.01 -0.07

Trading on the Accra Bourse closed the week in the red despite holding up positive year-to-date returns to investors. A total of 2.46 million shares worth GHS 2.91 million changed hands in fourteen stocks. MTN Ghana Ltd pinned its lead in total volume traded with 64.72 percent, closing the week as the most valuable stock. The Telecom giant contributed more than 66 percent of total value traded recorded at the closing bell. The market capitalization, however, declined by 0.07 percent to finish the week at GHS 61,524.01 million.

Stock Price Movements

On the price movers’ chart, 3 stocks altered their prices: 2 advancers and a laggard. Benso Oil Palm Plantation continued its rally, inching up by 15 pesewas to close the week at GHS2.40 per share. Fan Milk Ghana Ltd followed suit, raising its value by a pesewa to end the week at GHS1.35 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
BOPP 2.00 2.25 2.40 0.15 20.00
FML 1.08 1.34 1.35 0.01 25.00

On the flipside, Unilever Ghana PLC fell deep as the lone laggard, shedding 81 pesewas of its market value to end the week at GHS 2.19, per share.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
UNIL 8.29 3.00 2.19 -0.81 -73.58

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7936 5.7994 CAD 4.6032 4.6079
GBP 7.9871 7.9956 CFA 95.7560 95.8511
EUR 6.8435 6.8503 JPY 0.0526 0.0527
AUD 4.2938 4.2993 ZAR 0.4021 0.4025
NGN 70.9221 70.9445 CNY 0.8940 0.8948
Source: Bank of Ghana 25.05.2021

The US dollar continued its upward rally on the international forex market, supported by losses in long term Treasury yields, amid the Fed’s unwillingness to normalize monetary policy, like other central banks. Potential threats of Covid-19 in Asia and further US restrictions on China all fuelled the greenback’s grip. Latest data on US jobless claims fell to a new post-pandemic low of 360K from last week’s adjusted figure of 386K, as the labour market continue to bounce back, indicating a stronger outlook on the economy. The much-anticipated June 2021 headline sales upped to 0.6 percent month-on-month, against analysts’ forecast of a 0.4 percent decline, with core retail sales inching up to 1.3 percent as spending shifts back to services firming expectation of a rebound to the US economy. The US dollar thus outmuscled the local currency by 0.28 percent at a selling price of GHS 5.80 to record a year-to-date gain of 0.63 percent.

The British Pound extended its downtrend on the international forex market, although staging some momentum at the opening of trade on Friday, on the back of comments from a Bank of England’s official hinting a reduction in assets purchase program sooner than expected. Things took a bearish turn, as there appeared to be no signs from policymakers towards policy normalization. The fast spreading Delta variant resulting in over 48,000 confirmed cases in the UK on Thursday with a surge in hospitalisation fuelled concerns of economic slowdown. On the interbank currency market, the Pound reduced its weekly depreciation to 0.16 percent, settling at GHS 7.99. The year-to-date depreciation also finished the week at 1.46 percent.

The Euro (EUR) struggled to find footing at the week’s trade on the international currency market, as the Eurozone’s consumer price index edged at forecasted levels with inflation dipping to 1.9% in the month of June 2021, down from a 2.5 percent year high. The shared currency has suffered recently on the back of dovish approach to inflation as both Fed and the BOE adopt a hawkish outlook. A skewed economic recovery across the EU continues to hamper the currency’s progress as different regions record rising cases of the Delta forcing new restrictions. The Euro thus depreciated by 0.19 percent to settle the week’s selling price at GHS 6.85 on the interbank currency market. The year-to-date appreciation of the cedi thus increased to 3.17 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,369.55 4,327.16 -0.97 15.20%
DJIA 34,870.16 34,687.85 -0.52 13.33%
FTSE 100 7,121.88 7,008.09 -1.60 8.48%
NIKKEI 225 27,940.42 28,003.08 0.22 2.04%
FTSE/JSEAllShare 66,215.47 66,529.53 0.47 11.99%
NSE All Share 37,994.19 37,947.18 -0.12 -5.77%
Nairobi All Share 175.22 178.65 1.96 17.45%

Wallstreet closed the week’s trading on seeing major US indices sell off underpinned by fears that spiking inflation will sweep recovery gains. This whipped a run of three weekly gains despite an impressive retail sales data. Investors’ expectation that the expansion of the economy might not be as fast as predicted prompted demand for defensive stocks. Stocks in the major sectors of the US economy: energy led the declines with 7.9 percent loss on the back of OPEC+ members agreeing to an increase in output. The S&P 500 thus retreated by 0.97 percent week-on-week to close at 4,327.16 points. The Dow Jones Industrial Average also lost by 0.52 percent to finish the week at 34,687.85 points.

Trading on the London’s bourse left the FTSE 100, ending the week below the 7100 marks following concerns over the large numbers of workers to stay home and self-isolate as covid-19 cases rise. Labour decline in factories, shops and customer satisfaction centres continue to allay fears among business leaders, resulting in shutdown as the next approach as Nissan’s huge automobile manufacturing plant in Sunderland had been forced to cancel some shifts. The FTSE thus recorded a week-on-week decline of 1.6 percent to close the week at 7,008.09 points.

The Japan bourse continued its downwards decline from last week’s session on the back of sell offs in the Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225, however, inched up marginally by 0.22 percent to end the week’s trade at 28,003.08 index points.

On the African equity market, the Johannesburg All Share Index advanced by 0.47 percent to end the week at 66,529.53 points. The Nairobi All Share Index, also increased 1.96 percent to settle at 178.65 points. The Nigerian All Share Index, on the flip side, saw a 0.12 percent slip to end the week at 37,947.18 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 75.55 73.08 -3.27 41.08
Gold $/ounce 1,810.60 1,815.00 0.24 -4.23
Cocoa$/metric tonne 2,318.00 2,320.00 0.09 -10.87
Coffee $/pound 1.513 1.612 6.54 25.69
Source:www.bloomberg.com, & www.investing.com

Brent crude oil continued its bearish trend on the international commodity market despite starting the week on an upward momentum, as OPEC+ members agree to boost oil supply in the coming months after UAE and Saudi reached a compromise. Monthly oil report for July forecasts demand for the black gold is anticipated to cross the 100 million barrels per day by second quarter of 2022, above pandemic levels. Despite this development, oil prices failed to curtail its down trend. Brent crude oil thus shredded 3.27 percent of its value to finish the week at $73.08 per barrel.

Gold registered mixed trades on the international commodity market on an impressive note, until taking the bearish turn at the close of trade on Friday, as investors shifted focus to the greenback amid concerns about the Delta variant and its impact on global economic growth. Demand pressure from the world's largest buyer, China, is however expected to provide support for the yellow metal in the coming weeks. The precious metal thus lifted its weekly value by 0.24 percent to end the week’s trade at $1,815.00 per ounce.

Cocoa raised its value on the global market despite stockpile in the West African sub-region where the commodity is largely cultivated amid fears over surging COVID-19 cases and the potential threat of new restrictive measures globally. Poor new-crop development and projected uptick in demand for the cash crop in 2022 is tipped to move the market into a deficit next year to shore up prices. Cocoa, however, upped by 2 cents to close the week’s trade at 2,320.00 per metric tonne.

Coffee continued its surge on the global commodity market, as demand for the soft crop is set to exceed production. This is because the world’s top producer, Brazil, suffered the worst drought in almost 20 years, leaving plants to whither and causing a global dearth of the brew. New York-traded arabica futures have risen more than 18 percent in the past three months. Coffee thus saw an uptick by 6.54 percent week-on-week to settle at $1.61 per pound.

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