?    Producer Price Inflation for August is 10.2 percent
?    Yield on the 2-year note eased by 75 basis points.
?    Equity indices eased following loses in six equities.
?    Ghana cedi advanced against the British pound and Euro.
?    Gold tumbled as risk sentiment improves.  

Producer Price Inflation for August is 10.2 percent

Producer price inflation for the month of August settled at 10.2 percent, representing 1.4 percentage point increment from the previous value of 8.8 percent. The uptick was due to inflationary pressures at both the mining & quarrying and manufacturing sectors of the domestic economy. The producer price inflation for the mining & quarrying sector rose from the 27.6 in July to 36.5 percent in August. That for the manufacturing sector jumped by 0.4 percentage point from the 5.4 percent in July to 5.8 percent in August and this was largely due to the manufacturing of machinery and equipment which posted the highest rate of 24.7 percent. The producer price inflation for the utilities sub-sector, however, was unaltered at 1.2 percent in August. Presented below is the trend analysis of the PPI:

Key Ghana Economic Data

Indicator    2016    2017    2018    2019    2019
                Target    Actual
Inflation CPI (y-o-y %)    15.40    11.8    9.40    8.0    7.80
Inflation PPI (y-o-y %)    4.90    8.9    4.40    N/A    10.20
Monetary Policy Rate (%)    25.50    20.00    17.00    N/A    16.00
GDP Growth (y-o-y %)    3.7    8.5    6.3    7.1    5.7
Budget Deficit (% of GDP    9.3    5.9    3.8    4.5    1.8q1
Public Debt (% of GDP)    73.00    69.8    57.6    N/A    58.1May
Fx. Reserves (M. Cover)    2.80    4.3    3.7    ≥3.5    4.3
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
Sept30–Oct 3    14.69    15.15    17.91    19.00    19.70    19.50
Sept 23 – 27    14.68    15.14    17.91    19.75    19.70    19.50
Sept 16 – 20     14.70    15.14    17.91    19.75    19.70    19.50
2019Yr.Open    14.59    15.03    15.50    19.50    19.50    16.50
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rates on the Government of Ghana treasury securities recorded marginal adjustment after the week’s auction. The yield on the 91-Day T-Bill rose by a basis point to settle at 14.69 percent. The yield on the 182-Day T-Bill also increased by a percent to settle at 15.15 percent whereas interest rate on the 364-Day T-Bill remained unchanged at 17.91 percent. The 2-year treasury note however, eased by 75 basis points to 19.00 percent but the yield on the other treasury securities remained unchanged.

Results of Auction held on 27th September, 2019

Bill    Bids Tendered GHS (Million)    Bids Accepted GHS (Million)    Interest Rate (%)
91-Day T-Bill    428.18    428.18    14.6899
182-Day T-Bill    103.66    103.66    15.1455
364-Day T-Bill    37.31    37.31    17.9082
2-Yr Note    341.00    341.00    19.0000

Government raised a total of GHS910.15 million after accepting all bids tendered at the auction. The GHS965.00 million target was slightly missed with the 91-Day T-Bill constituting 47.04 percent of the overall bids accepted. An amount of GHS686.00 million is expected to be raised at the upcoming auction from the sale of the short-dated treasury securities. 

Despite the rate adjustment recorded at the auction, the yield curve sustained its normality. This is much expected following the relative attractiveness of the market against other markets vis-à-vis Government’s appetite for borrowing. Furthermore, recent right trending of macroeconomic indicators such as inflation, stability of the currency, and stable monetary policy rate have improved investor sentiment leading to stability in interest rate.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year    2015    2016    2017    2018    2019
GSE-CI    -11.77    -15.33    52.73    -0.29    -14.10
GSE-FSI    -13.98    -19.93    49.51    -6.79    -12.67

Trading on the Accra Bourse ended in the red as the selling pressures within the financial sector stocks weighed on the market indices. At the close of weekly trading, the GSE Composite Index dropped by 0.67 percent to close at 2,209.57 points, representing a year-to-date loss of 14.10 percent. The GSE Financial Stock Index, similarly, nosedived by 1.38 percent to settle at an index point of 1,880.96, reflecting a year-to-date loss of 12.67 percent.

 
GSE Market Indicators
    Wk. Open       Wk. End    Change (%)
Total Volume Traded (M)    29.29    27.99    -4.45
Total Value Traded (GHS M)    26.14    20.15    -22.92
Market Capitalisation (GHS M)    56,618.20    56,300.11    -0.56

At the close of the truncated trading week, lower volumes of shares were traded as compared to the figures recorded in the previous trading week. A total of 27.99 million shares valued at GHS20.15 million exchanged hands in the week under review, as compared to the 29.29 million worth GHS26.14 million raised in the week ended 20th September 2019. Liquidity on the bourse was mainly driven by MTN Ghana Ltd as it accounted for 98.12 percent of the overall traded volume. Following the bearish outturn of market activities, total market capitalization recorded a decline of 0.56 percent to settle at GHS56,300.11 million.  

Stock Price Movements

On price movements, a total of nine equities altered their week opening prices. This comprises of three advancers and six laggards. CAL Bank Ltd and Enterprise Group Ltd recorded price appreciation of 7 pesewas each to trade at 91 pesewas and GHS1.77 per share respectively. SIC Ltd also advanced by a pesewa to end the week’s trade at 11 pesewas per share.

    Stock Price Advancers in terms of WK closing prices
Equity    Yr. Open    Wk. Open    Wk. End    Wk. Change (GHS)    YTD (%)
CAL    0.98    0.84    0.91    0.07    -7.14
EGL    2.24    1.70    1.77    0.07    -20.98
SIC    0.19    0.10    0.11    0.01    -42.11

Standard Chartered Bank Ltd was the worst performing stock after trimming 24 pesewas of its share price to close at GHS16.76 per share. GCB Bank Ltd and Total Petroleum Ltd shed 18 pesewas and 6 pesewas to trade at GHS4.92 and GHS2.89 per share respectively. Société Générale Ghana Ltd and Ecobank Ghana Ltd went down by 5 pesewas and 4 pesewas to close the week’s trade at 63 pesewas and GHS7.74 per share respectively. Ecobank Transnational Incorporated Ltd also lowered its share price by a pesewa to end the week’s trading at 9 pesewas per share.

    Stock Price Losers in terms of WK closing prices
Equity    Yr. Open    Wk. Open    Wk. End    Wk. Change (GHS)    YTD (%)
ETI    0.16    0.10    0.09    -0.01    -43.75
EGH    7.50    7.78    7.74    -0.04    3.20
SOGEGH    0.75    0.68    0.63    -0.05    -16.00
TOTAL    3.40    2.95    2.89    -0.06    -15.00
GCB    4.60    5.10    4.92    -0.18    6.96
SCB    21.00    17.00    16.76    -0.24    -20.19
Currency Market

Currency    Buying    Selling    Currency    Buying    Selling
USD    5.3134    5.3188    CAD    4.0166    4.0192
GBP    6.5414    6.5485    CFA    112.6803    112.7519
EUR    5.8177    5.8214    JPY    0.0491    0.0492
AUD    3.5984    3.6030    ZAR    0.3523    0.3526
NGN    57.5335    57.7216    CNY    0.7522    0.7524
Source: Bank of Ghana 27.09.19

On the interbank currency market, the Ghana cedi advanced against the British pound and the Euro but depreciated versus the US dollar. The US dollar ended the week’s trading on an upbeat note after a revised GDP confirmed previous estimate to lift market sentiment. In the week under review, data confirmed a 2.0 percent expansion of the US economy in the second quarter of 2019 despite growth drags in many advanced economies. The rise in consumer spending by 0.1 percent in August and hopes of trade truce between the US and China to end the prolonged trade dispute also supported the dollar in the week’s trading activities. The US dollar thus recorded an appreciation of 0.08 percent to trade at GHS5.32 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 9.33 percent.

The British pound was on the defensive despite starting the trading week on an impressive note. The pound failed to capitalise on UK’s supreme court unanimous ruling of the unlawful five week’s suspension of the UK parliament by Boris Johnson. Despite this ruling, the deepening uncertainties in the chances of the UK exiting the bloc with or without a trade agreement as the 31st October deadline fast approaches dimmed the outlook the of the pound. The potential difficulty facing UK businesses in international trade and its future dealings weighed on investors assessment of the UK’s economy. The pound thus posted a week-on-week decline of 1.27 percent as it traded at GHS6.55 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 5.71 percent.  

The Euro dimmed its outlook on the international currency market as weak economic data continued to emerge from the bloc. In addition to recent strings of data suggesting a deteriorating economy, factory activities in Eurozone’s largest economy recorded its biggest contraction in ten years in the month of September. On the back of this, overall economic sentiment of the bloc has sharply dropped to its lowest in 4-years in September with investors expressing ill sentiment ahead of the release of inflation and unemployment data for September in the coming week. The Euro thus recorded a week-on-week depreciation of 0.87 percent as it traded at GHS5.82 on the interbank currency market. The year-to-date depreciation of the cedi thus narrowed to 5.26 percent.

International Markets

Stock Indices
    Wk. Open    Wk. Close    Change (%)    YTD (%)
S&P 500 Index    2,992.03    2,961.79    -1.01    18.15
DJIA    26,935.07    26,820.25    -0.43    14.97
FTSE 100    7,344.92    7,426.21    1.11    10.38
NIKKEI 225    22,079.09    21,878.90    -0.91    9.31
FTSE/JSEAllShare    56,406.89    55,209.03    -2.12    4.69
NSE All Share    27,698.69    27,675.04    -0.09    -11.95
Nairobi All Share    144.98    144.27    -0.49    2.73

Wallstreet ended the trading week in the red on account of heightened trade tension as the US considered ways to limit Chinese access to the US capital markets. Plans by the US to delist Chinese companies from the bourse while also limiting their investment sparked uncertainties on the bourse. Stocks from the telecommunication sectors including Microsoft, Apple, Nvidia, Micron Technology, Facebook and Alphabet tumbled on account of this development. The S&P 500 thus fell by 1.01 percent to settle at 2,961.79 points whereas the Dow Jones Industrial Average Index also declined by 0.43 percent to settle at 26,820.25 points.

The London Stock Exchange witnessed a rebound following the supreme court ruling that Boris Johnson suspension of the UK’s parliament was unlawful. The FTSE 100 thus rose by 1.11 percent to settle at 7,426.21 points.

The Nikkei 225 tumbled following re-awakening of tension between the US and the Chinese after the former signalled a delistment of some Chinese stocks. The Nikkei 225 thus went down by 0.91 percent to settle at 21,878.90 points.

On the African equity market, the Johannesburg All Share Index dropped by 2.12 percent to settle at 55,209.03 points. The Nigerian All Share Index thus fell by 0.09 percent to settle at 27,675.04 points. The Nairobi All Share Index also dipped by 0.49 percent to settle at 144.27 points.

Commodities
    Wk. Open    Wk. Close    Change (%)    YTD (%)
Crude Oil $/barrel    64.28    61.91    -3.69    15.07
Gold $/ounce    1,515.10    1,506.40    -0.57    17.57
Cocoa$/metric tonne     2,473.00    2,490.00    0.69    3.06
Coffee $/pound    0.984    1.009    2.54    -0.93
Source:www.bloomberg.com, & www.investing.com

Brent crude oil tumbled on US plans to lift sanctions imposition on Iran. The US and Iranian Governments made headway with the former willing to lift all sanctions albeit the possibility of conditionalities. The decision by Saudi Arabia to cease fire in Yemen also contributed to the price decline of the energy commodity as these could trigger global supply glut. Brent crude oil thus dropped by $2.37 to trade at $61.91 per barrel.

Gold lost is appeal on the international commodities market as Saudi Arabia ceased fire to lift risk taking among investors. The paradigm shift in investment activities as a result of the relative peace lowered the demand for Gold in the week under review. Gold thus shed $8.70 to settle at $1,506.40 per ounce.

Cocoa was little changed after the week’s trading activities despite the price floor measures adopted by Ghana and Ivory Coast. Cocoa, having posted a third consecutive weekly gain on the back of the price floor initiative, cooled off following reports that some farmers in Ivory Coast were artificially manipulating prices as they hoard large quantities of the beans. Cocoa thus gain $17.00 to trade at $2,490.00 per metric tonne.  

Coffee posted a recovery on the international commodities market following production challenges in Vietnam and recovery of the Brazilian real. Coffee thus gain 2 cents to trade at $1.01 per pound.