• Ghana drops four places in Ease of Doing Business rankings
• Yields on treasury securities recorded mixed adjustments.
• The equity market extended its bearish run.
• The Ghana cedi firmed against the Pound and  Euro but lost to the  US dollar.
• Coffee rebounded on the international commodities market.

Macroeconomic Update

Ghana drops four places in World Bank Ease of Doing Business ranking.

Ghana skid four places down the pecking order from 114 in 2019 to 118 among 190 countries surveyed in the World Bank Ease of Doing Business ranking for 2020. This was attributed to the cumbersome and costly tax payment system in Ghana requiring a conversion of portion of the recoverable Value Added Tax into the Ghana Education Trust Fund and the National Health Insurance Levy. Within the key areas assessed, Ghana ranked 72 under “Area of Protecting Minority Investors” but recorded its lowest outturn under  payment of taxes, placing 152 out  of 190 countries with a score of 56.0.It is however hoped that the numerous policy reforms Government is embarking on will create a more business friendly environment to boost private sector participation .These include the automatic generation of TIN online, Filing tax returns online, Instant online issuance of Business Operating Permit, among others. Presented below is Ghana’s historical performance in the World Bank Ease of Doing Business ranking:

Source: BOG; MOFEP; GSS.     * represents provisional estimate

Government of Ghana Treasury Securities

NB: The above are the annual yields on Government of Ghana Treasury Securities.

Yields on treasury securities witnessed mixed outturns after the week’s auctions. The yield on the 182-Day T-Bill upped by 2 basis points to settle at 15.14 percent. The yields on the 91 and the 364-Day T-Bill Day remained unchanged at 14.69 percent and 17.90 percent respectively. The yields on other treasury notes and bonds, however, remained unchanged.

Last week’s auction closed with Government accepting all the GHS 816.07 million bids tendered by investors. The amount raised by Government exceeded the week’s target of GHS762.00 million. Among the treasury instruments accepted by Government, the 91-Day T-Bill dominated with  82.15 percent share of the overall accepted bids. An amount of GHS 491.00 million is expected to be raised from the sale of the 91-Day, 182-Day and 364-Day T-Bills.

Illustrated above is the term structure of the Government of Ghana treasury securities. The yield curve maintained its normality as investors shift their demand to money market securities owing to bearish nature of the equity market. We foresee the sustenance of the yield curve in subsequent auctions following the relative attractiveness of the money market which may compel Government to accept bids at reduced rate on the short-term issuance.

Ghana Stock Exchange

The equity market extended its bearish run as losses in some financial and energy stocks  dragged the market indices lower. Expectations of upbeat third quarter earnings reports from listed companies failed to ignite a turnaround  on the market  following dwindling investors’ confidence caused by the ripple effects of the banking sector clean-up. The GSE Composite Index thus recorded a  week-on-week loss of 0.29 percent as it settled at 2,155.46 points, representing  a year-to-date loss of 16.20 percent. The GSE Financial Stocks Index also posted  a decline of  0.38 percent to end the trading week at 1,817.44 points, representing a year-to-date loss of 15.61 percent. 

Trading activity strengthened in the week under review with 8.57 million shares valued at GHS 7.56 million exchanging hands compared the 0.72 million shares valued at GHS1.21 million recorded in the previous week’s trading session. CAL Bank  Ltd emerged as the most actively traded stock, accounting for 55.61 percent of the overall traded volume. Market capitalization  recorded a  week-on-week decline  by 0.11 to close at GHS 55,578.25 million.

Stock Price Movements

At the close of the week’s trading session, four equities witnessed price changes. Total Petroleum Ghana Ltd closed as the worst performing stock trimming 5 pesewas of its opening price to settle at 2.82 per share. Ghana Oil Company Ltd and Cal Bank Ltd also dipped by 5 pesewas each to trade at GHS1.70 and 70 pesewas per share respectively. Société Generale Ghana Ltd also shed a pesewa to close at 57 pesewas per share. No advancers were however recorded after the day’s trades.

Currency Market

Source: Bank of Ghana 25.10.19

On the interbank forex market, the Ghana cedi appreciated against the US Dollar but depreciated versus the Pound and the Euro. The US Dollar firmed on the international currency market buoyed by upbeat economic data in the US which raised investors expectation of a rate cut by Fed. The  Markit purchasing managers’ index  rose from 51.1 in October to 51.1 in September Additionally, US Jobless claims in the week under review slipped  from 218,000 to seasonally adjusted outturn of  212,000.These bullish readings raised market expectation of a third cut in borrowing cost by the US Fed in its upcoming policy review meeting  to boost demand for the greenback. The US dollar thus recorded a week-on week gain of 0.20 percent as it traded at GHS5.33 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 9.61 percent.

The British Pound hit a week-low against major peers as heightened Brexit uncertainties sapped demand for the currency. The European Union’s failure to give a definite approval to Britain’s request for a three-month extension of the Brexit deadline coupled with Boris Johnson’s push for a national election on December 12 to break the political stalemate dampened investor’s sentiments to affect the Pound. The Pound succumbed under these developments as it posted a week-on-week loss of 0.31 percent to sell at GH6.85 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 9.82 percent.

The Euro was on the backfoot on the international forex market on account of soft economic data in the bloc and dovish stance adopted by the European Central Bank at its policy review meeting. The IHS Markit’s flash composite PMI, came in at 50.2 for October below the projected 50.3 rise; signalling weak economic growth. The Shared currency’s woes were deepened by the ECB’s decision to keep interest rates on hold and leave its asset buying policy unchanged.  Following the Euro’ loss, it recorded a week-on-week loss of 0.28 percent to sell at GHS5.92 on the interbank currency market, trimming the year-to-date depreciation of the cedi to 6.76 percent.

Source:www.bloomberg.com, & www.investing.com

Brent crude oil rose to three-weeks high on the international commodities market driven by decline in crude inventories. Data released by the U.S. Energy Information Administration revealed a drop in crude inventory as it settled at 1.7 million per barrel below the expected 2.2 million per barrel which sparked short term positions among investors; lifting the value of the commodity. Brent crude oil thus upturned by 4.38 percent to trade at $ 62.02 per barrel.

Gold hovered near a month-high on safe haven bids sparked by dwindling investors’ sentiments in some global economies following Brexit worries, downbeat economic data in the Eurozone and expectation of a cut in interest rates by the US Fed which buoyed demand for the yellow metal. Gold thus upped by $11.20 to trade at $ 1,505.30 per ounce.

Cocoa sustained its gains supported by top Growers- Ivory Coast and Ghana’s commitment to strengthening the sustainability schemes and living income differential (LID) to boost farmers income while curbing supply. Cocoa thus upped by 0.16 percent to end the trading week at $ 2,490.00 per metric tonne.

Coffee advanced on the international commodities market as a rebound in the value of the Brazilian real lifted the value of the commodity. Coffee thus rose by 4 cents to close at 99 cents per pound.

International Markets

The US equity market closed bullish spurred by hopes of a trade truce as significant strides made by the US and Chinese Governments towards reaching a compromise on the first phase of trade negotiations boosted investor’s risk appetite. The S&P 500 thus upturned by 1.22 percent to settle at an index level of 3,022.55 points. The Dow Jones Industrial Average recorded a weekly gain of 0.70 percent to close the week at 26,958.06 points.

The London Stock Exchange edged higher driven by a weaker pound on account of Brexit worries amid uncertainties on the new deadline for the Brexit deal and calls for an early election which shifted investors demand to risky assets. The FTSE 100 thus posted a weekly gain of 2.22 percent to settle at 7,296.50 points.

The Japanese Stocks Exchange advanced on the international stock market supported by gains in Paper & Pulp, Railway & Bus and Real Estate sectors following upbeat earnings reports. The Nikkei 225 registered a week-on-week gain of 1.37 percent to close at 22,799.81 points.

On the African equity market, the Nairobi All Share Index advanced by 1.15 percent to end the week’s trade at 150.07 points. On the downside, the Johannesburg All Share Index dipped by 1.04 percent to close at 55,141.98 points. The Nigerian All Share Index also eased by 0.38 percentage point to close at 26,348.73 points.