Weekly Highlights

? July’s inflation settled at 11.40 percent.
? Interest rates on 91-Day and 182-Day T-Bills surged.
? GSE tumbled on account of selloffs in some consumer stable stocks.
? The Cedi depreciated against the three major trading currencies.
? Global equity market sustained recoveries.
? Brent crude oil rose further as demand increased.

Macroeconomic Update

July’s inflation settled at 11.40 percent

Headline inflation saw a rebound in the month of July as it reversed June’s downturn by 20 basis points to settle at 11.40 percent. The upward drive of prices in the month of July came in strongly at the non-food sector with inflation rising by 50 basis points from June’s rate of 9.20 percent to 9.70 percent in July. Housing, Water, Electricity & Gas, and the transport sub-sectors were the lead drivers of inflation at the non-food sector as they recorded year-on-year changes of 20.3 percent and 10.0 percent, respectively. The Food and Non-alcoholic sector on the other hand had its inflationary pressure easing from 13.80 percent in June to 13.70 percent in July. Three subgroups namely Vegetables (28.2%), Fish and other Seafood (16.1%), Fruits and Nuts (13.0%) within the Food and Non-alcoholic sector, however, registered inflation rates above the sector average. Presented below is the trend analysis of the regional breakdown of the national headline inflation with inflation being higher at the Greater Accra Region (16.2%) vis-à-vis the Volta Region recording the lowest rate.

Regional brake down of Headline Inflation (June-July)

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 11.40
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 7.40
Monetary Policy Rate (%) 20.0 17.0 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 n/a
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 4.7 n/a
Public Debt (% of GDP) 69.8 57.6 63.00 n/a n/a
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 n/a
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
Aug 17 – 21 14.00 14.11 16.83 18.75 18.85 19.25
Aug 10 – 14 13.99 14.08 16.94 18.75 18.85 19.25
Aug 03 – 08 13.99 14.05 16.82 18.75 18.85 19.25
2020 Yr. Open 14.70 15.15 17.90 20.95 19.70 19.50
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Yields on the 91-Day T-Bill rose further by a basis point to settle at 14.00 percent. Interests rate on the 182-Day T-Bill also increased by 3 basis points to settle at 14.11 percent. That on the 364-Day T-Bill, however, eased by 11 basis points to settle at 16.83 percent. The yields on the Government of Ghana treasury notes and 3-Year and 5-Year bonds were, however, unaltered.

Results of Auction held on 14th August, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 626.43 626.43 14.0045
182-Day T-Bill 125.45 125.45 14.1117
364-Day T-Bill 50.79 50.79 16.8345

At the auction, Government accepted all the GHS802.67 million bids tendered at the week’s auction. This fell below the week’s target of GHS1,025.00 million as well as the GHS918.87 million bids accepted at the previous week’s auction. The 91-Day T-Bill dominated Government’s purchase, constituting 78.04 percent of the overall bids accepted. An amount of GHS1,137.00 million is scheduled to be raised at the upcoming auction through the issuance of the 91-Day and 182-Day T-Bills.

The normality of the yield curve was sustained, as largely anticipated, following the equilibrium nexus of current demand and supply factors on the money market. The growing appetite for safe-haven assets, as investors continue to react to the financial sector clean-up and the demand for funds by Government to undertake its development projects, amidst commitment by the central bank in making long-dated treasury securities much attractive than the short-dated ones are factors sustaining the normality of the yield curve.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2016 2017 2018 2019 2020
GSE-CI -15.33 52.73 -0.29 -12.25 -16.87
GSE-FSI -19.93 49.51 -6.79 -6.23 -14.58

The Ghana Stock Exchange closed in the red as selloffs in some consumer staple stocks dragged the market indices lower. On the back of this, the GSE Composite Index dropped by 53 basis points to settle at 1,876.41 points, corresponding to a year-to-date loss of 16.87 percent. The GSE Financial Stocks Index, however, was unchanged at 1,725.21 points, reflecting a year-to-date loss of 14.58 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 10.38 9.78 -5.77
Total Value Traded (GHS M) 6.26 5.90 -5.66
Market Cap (GHS M) 52,813.63 52,709.33 -0.20

At the closing bell, a total of 9.78 million shares valued at GHS5.90 exchange hands, representing 5.77 percent decline from the previous week’s trade. CAL Bank Ltd led the activity chart with 82.14 percent share of the overall traded volume. The market capitalization also went down by 0.20 percent, on account of the losses recorded on the bourse, to settle at GHS52,709.33 million.

Stock Price Movements

A total of two equities altered their week opening prices with no gainer recorded. Unilever Ghana Ltd was the worst performer, it trimmed GHS1.39 pesewas of its opening price to trade at GHS12.59 per share. FAN Milk Ltd also followed suit with 15 pesewas decline to trade at GHS1.50 per share.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
FML 4.12 1.65 1.50 -0.64 -9.09%
UNIL 16.40 13.98 12.59 -0.23 -9.94%

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6778 5.6834 CAD 4.2833 4.2870
GBP 7.4401 7.4481 CFA 97.5720 97.6606
EUR 6.7167 6.7228 JPY 0.0533 0.0534
AUD 4.0690 4.0741 ZAR 0.3270 0.3272
NGN 68.0386 68.1266 CNY 0.8171 0.8177
Source: Bank of Ghana 14.08.2020

The interbank currency market ended with the Ghana Cedi losing ground against the three major trading currencies. The US dollar recorded another round of weekly depreciation, registering its longest weekly losing streak in a decade. Investors’ drift from the safe-haven currency follows the revamping of economic activities in the region which has sparked investors’ demand for riskier assets such as stocks and treasury instruments. The third consecutive monthly rise in consumer spending to 1.2 percent despite falling below the 1.9 percent target, improved labour statistics with lower unemployment benefits filling, and rising interest rates on government bonds with the 10-year bond gaining about 15 basis points, buoyed risk taking sentiment which affected the dollar’s outturn. Despite the dollar’s loss on the international forex market, it recorded a week-on-week appreciation of 0.02 percent at GHS5.68 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 2.58 percent.

The British Pound failed to sustain its recent upward rally, as weak economic data, and Government restrictions of certain segments of UK’s economy affected its outturn in the week under review. GDP growth for the second quarter of 2020 came in much weaker-than-expected as the UK economy suffered the biggest setback among other advanced economies, owing to the COVID-19 pandemic induced economy recession of 20.4 percent. UK’s inflation and retail sales data for July are also projected to be lower than expected as they are scheduled to be released in the coming week. This coupled with the decision by the government to quarantine some tourists sparked concerns about the rising cases of the novel virus. Despite this, it appreciated by 0.49 percent to trade at GHS7.45 last Friday. The year-to-date depreciation of the cedi thus rose to 1.72 percent.

The Euro was on the backfoot on the international currency market following a string of downbeat economic data which weighed on investor’s sentiments. Eurozone’s unemployment saw a rise of 10 basis points from May’s figure of 7.0 percent to 7.1 percent in June. Gross Domestic Product for the second quarter of 2020 also contracted by 12.1 percent, which affected demand for the single currency. Despite the Euro’s loss, it appreciated by 0.46 percent to sell at GHS6.72 on the interbank currency market. The year-to-date depreciation of the Cedi thus widened to .58 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,351.28 3,372.85 0.64 4.40
DJIA 27,433.48 27,931.02 1.81 -2.13
FTSE 100 6,032.18 6,090.04 0.96 -19.26
NIKKEI 225 22,329.94 23,289.36 4.30 -1.55
FTSE/JSE All Share 56,757.73 57,077.48 0.56 -0.01
NSE All Share 25,041.89 25,199.84 0.63 -6.12
Nairobi All Share 130.58 129.46 -0.86 -22.20

Wallstreet closed on a positive note as upbeat economic data from the US economy subdued investors’ ill-sentiment surrounding the slow approval of the coronavirus relief package by the US congress. Dwindling unemployment claims, strong retail sales data (1.2%) and rebound in industrial production of 3 percent in July were some economic developments stimulating investors’ risk-taking appetite. The S&P 500 thus gained 0.64 percent after the week’s trade as it settled at 3,372.85 points. The Dow Jones Industrial Average also recorded a week-on-week rise of 1.81 percent to settle at 27,931.02 points.

The London Stock Exchange closed in the gains lifted by investors optimism of a fast recovery in the UK’s economy. The UK’s economy saw an 8.7 percent recovery in economic activities especially at the consumer spending and house purchase which overshadowed the 20 percent contraction of UK’s economy in the 2nd quarter of 2020. The FTSE 100 thus recorded 0.96 percent rise to end the trading week at 6,090.04 points.

The Japanese Stock Exchange climbed further as the slight weakening of the Yen amid some positive corporate earnings from the technological shares provided support to the bourse. The Nikkei 225 thus posted a weekly gain of 4.30 percent to close at 23,289.36 points.

On the African equity market, the Johannesburg All Share Index rose by 0.56 percent to settle at 57,077.48 points. The Nigerian Stocks Exchange also rose further 0.63 percent as it settled at 25,199.84 points. The Nairobi All Share Index, however, shed 0.86 percent to end the trading week at 129.46 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 44.4 44.8 0.90 -32.12
Gold $/ounce 2,028.00 1,949.80 -3.86 28.02
Cocoa$/metric tonne 2,546.00 2,436.00 -4.32 -4.09
Coffee $/pound 1.1545 1.147 -0.65 -11.57
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil climbed further on signs of global demand uptick associated with recent surge in economic activities following the easing of the Covid-19 restrictions. The energy commodity also gained support on US’ production cut, rise in demand expectation by OPEC from the 8.95 million bpd to 9.06 million bpd for 2020 and the unlikeness by OPEC to adopt a production cut in its upcoming meeting. Brent crude oil thus upped by 90 cents to close the week at $44.80 per barrel.

Gold closed in the red on account of growing risk sentiment following signs of economic recovery in the global market. In the US, improved labour market statistics as jobless claims for the week ended 7th August of 963,000 was below the 1.1 million forecasts, weighed on the value of the yellow metal. Gold thus shed $78.20 to trade at $1,949.80 per ounce.

Cocoa tumbled on the international commodities market as production outlook appeared much brighter on account of the favourable climatic conditions and soil moisture in Ivory Coast. This resulted in the downward review of the price of the soft crop as investors anticipate excess supply in the coming days. Cocoa thus trimmed $110.00 to trade at $2,436.00 per metric tonne.

Coffee posted a decline on the international commodities market on account of the fast depreciation of the Brazilian real. This erased earlier gains from the reduced export from top growers onto the commodities market. Export of coffee from Brazil and Vietnam fell significantly in July by 11 percent and 22 percent (year-on-year basis) respectively to reduce the availability of the beans on the market. Coffee thus shed a cent to trade at $1.19 per pound.

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