Weekly Highlights

• December 2020 Inflation settled at 10.4 percent.
• Yields on 91-Day and 182-Day T- Bills unchanged.
• Accra Bourse upped its year-to-date performance.
• Ghana cedi performed mixed against the three major trading currencies.
• US equity market tumbled due to unexciting financials.
• Brent crude oil dipped on demand side disruption by COVIDS-19.

Macroeconomic update
December 2020 Inflation settled at 10.4 percent
Consumer Price Inflation settled at 10.4 percent in the last month of 2020, representing 60 basis points rise. The increment followed inflationary pressures within the food and non-alcoholic beverage sector with the food inflation accounting for 59.1 percent of the overall inflation rate. As a result, inflation for the food and non-alcoholic beverage component of the CPI surged by 240 basis points from 11.70 percent to 14.10 percent. Non-food inflation, however, dipped by 60 basis points to settle at 7.70 percent.

In comparison with the previous year’s inflationary outturn, inflation inched up by 250 basis points, i.e., from 7.9 percent in December 2019 to 10.40 percent in December 2020. The upsurge is ascribed to the ripple effects of the Covid-19 pandemic, which affected general price levels across the global and domestic market. The restrictions on goods and services as well as movements of persons resulted in price surge in 2020, overturning the 2-year records of single digit in April 2020 to 10.60 percent, the highest in 2020. The inflationary index, however, witnessed a five-month consecutive easing in July (11.40%) to November (9.80%), but eventual surged to end the year at 10.40 percent. Despite the general uptrend, inflation was largely within the Government’s revised target of 11.1 percent. Illustrated in the diagram below is the trend analysis of the CPI since June 2018.

Trend analysis of the CPI (Jun-18 – Dec 2020)

Key Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 11.1 10.40
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 8.40
Monetary Policy Rate (%) 20.0 17.0 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 0.9 -1.1 Q3
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 7.2 7.9
Public Debt (% of GDP) 69.8 57.6 63.00 n/a 68.3
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?4.0 4.0
Source: BOG; MOFEP; GSS. * represents provisional estimate ** data yet to be released by MoF

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Jan 18 – 22 14.09 14.14 16.96 18.50 19.25 19.85
Jan 11 – 15 14.09 14.14 16.96 18.50 19.25 19.85
Jan 04 – 08 14.10 14.15 16.96 18.50 19.25 19.85
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.

Yields on the Government of Ghana treasury securities were unchanged at last Friday’s auction. Interest rate on the 91-Day T-Bill remained at 14.09 percent whiles that on the 182-Day stayed at 14.14 percent. Interest rates on the other treasury securities, however, were unchanged as they were not part of the week’s issuance.

Results of Auction held on 8th January, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 864.67 864.67 14.0881
182-Day T-Bill 124.21 124.21 14.1431

Government accepted all the GHS988.88 million worth of bids tendered at the week’s auction. This was more than the week’s target of GHS756.00 million but below the GHS1.07 billion raised at the previous week’s auction. In terms of composition, the 91-Day T-Bill was the most accepted bid by the Government as it constituted 87.44 percent of the overall bids raised. The Government anticipates raising a total of GHS1,235.00 million at the upcoming auction through the sales of the 91-Day, 182-Day, and 364-Day T-Bills.

The yield curve sustained its normality as the yields on treasury securities were unaltered, hence, maintaining the positive upward sloping nature of the curve. The general positive outlook of the money market also follows investors drift for safety of their funds, following the recent financial crisis.

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 1.41
GSE-FSI 49.51 -6.79 -6.23 -11.73 0.39

The Accra Bourse posted another round of week-on-week gain as risk taking sentiment largely improves on both the global and the domestic markets. This follows investor anticipation of a rebound in economic activities following the development and effectiveness of the COVID-19 vaccine. The GSE Composite Index thus posted a week-on-week gain of 0.68 percent to settle at an index level of 1,969.02 points, bringing its year-to-date gain to 1.41 percent. The GSE Financial Sector Index also registered a week-on-week rise of 0.39 percent as it rose to 1,789.66 points, corresponding to a year-to-date gain of 0.39 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 70.21 20.39 -70.96
Total Value Traded (GHS M) 46.03 13.43 -70.82
Market Cap (GHS M) 54,549.91 54,685.55 0.25

Market turnout dimmed in comparison with the previous week’s performance. A total of 20.39 million shares valued at GHS13.43 million exchanged hands in the week’s trade, as compared to the 70.21 million shares valued at GHS46.03 million traded a week earlier. MTN Ghana Ltd led the activity chart with 98.49 percent composition of the week’s total trade. Following the positive closure of the market, market capitalization rose by 0.25 percent to GHS54,685.55 million.

Stock Price Movements

The week’s trade ended with four (4) movers, three (3) advancers and one (1) laggard. Société Générale Ghana Ltd led the bull’s run, with a price uplift of 2 pesewas to trade at 66 pesewas per share. Ghana Oil Company Ltd and MTN Ghana Ltd also saw price surges of a pesewa each to trade at GHS1.51 and 66 pesewas per share, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
SOGEGH 0.64 0.64 0.66 0.02 3.13
GOIL 1.50 1.50 1.51 0.01 0.67
MTNGH 0.64 0.65 0.66 0.01 3.13

On the flipside, shares of Aluworks Ltd dropped by a pesewa to trade at 10 pesewas per share.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
ALW 0.11 0.11 0.10 -0.01 -9.09

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7576 5.7634 CAD 4.5163 4.5206
GBP 7.8281 7.8365 CFA 94.1439 94.2277
EUR 6.9614 6.9676 JPY 0.0555 0.0555
AUD 4.4322 4.4370 ZAR 0.3777 0.3779
NGN 67.0081 67.1817 CNY 0.8889 0.8895
Source: Bank of Ghana 15.01.2021

The interbank currency market saw the Ghana cedi posting mixed performance against the three major trading currencies. The Ghana cedi outmuscled the Euro, depreciated against the British pound but unchanged versus the US dollar. The US dollar posted a sterling performance on the international currency market as it recorded its biggest gain since November 2020, benefiting from how the markets turned risk averse due to the daily rise in infection cases in the US. The dollar’s gains also followed rise in US treasury yields with the yield on the 10-Year Note rising to a new height of 1.16 percent, amidst high expectation of more stimulus package under the new US administration. Despite this, the US dollar was still selling at GHS5.76 on the interbank currency market with a year-to-date performance of 0.00 percent.

The British pound jumped to its highest in two months on the international currency market after the release of GDP data for the month of November 2020. UK’s economy witnessed a monthly contraction of 2.6 percent in November. This was less damaging than expected since the imposition of a national lockdown last spring. This, coupled with pushed-back expectations of negative interest rates and hopes for a quicker economic recovery in Britain because of its vaccination campaign, buoyed the currency this week. The British pound thus posted a week-on-week appreciation of 0.21 percent as its selling price rose to GHS7.84 on the interbank currency market. The year-to-date appreciation of the cedi thus reduced to 0.54 percent.

The Euro was on the defensive against major peers on the international currency due to daunting economic data from the bloc. Eurozone’s largest economy – Germany had its economy contracting by 5 percent in 2020, almost at par with the 5.7 percent contraction witnessed by the economy during the 2009 global financial crisis. The Euro thus posted a week-on-week depreciation of 1.21 percent as it lowered its selling price to GHS6.97 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 1.43 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,824.68 3,768.25 -1.48 0.32
DJIA 31,097.97 30,814.26 -0.91 0.68
FTSE 100 6,873.26 6,735.71 -2.00 4.26
NIKKEI 225 28,139.03 28,519.18 1.35 3.92
FTSE/JSEAllShare 63,519.18 63,549.75 0.05 6.97
NSE All Share 40,123.71 41,176.14 2.62 2.25
Nairobi All Share 154.18 158.19 2.60 4.00

The US equity market snapped a three-week winning streak and recorded its first weekly decline in the new year, following unexciting financials posted by some listed stocks mainly within the Financial and energy sectors. This coupled with downbeat economic readings with retail sales falling by 0.7 percent in December 2020, the third consecutive monthly decline, weighed on market sentiment in the week’s trade. S&P 500 thus posted a week-on-week decline of 1.48 percent as it settled at 3,768.25 points, trimming its year-to-date gain to 0.32 percent. The Dow Jones Industrial Average also eased by 0.91 percent after the week’s trade as it settled at 30,814.26 points. The year-to-date gain of the index thus reduced to 0.68 percent.

The London Stock Exchange posted a week-on-week decline on account of the resurgence of the British pound which negatively affected the prices of stocks on the bourse for non-pound holders. The FTSE 100 thus fell by 2.00 percent to settle at 6,735.71 points, trimming its year-to-date gain to 4.26 percent.

The Japanese Stock Exchange climbed further, as it rode on demand pressures in Paper & Pulp, Railway & Bus and Real Estate. The Nikkei 225 thus finished with a week-on-week gain of 1.35 percent to settle at 28,519.18 points. The year-to-date gain of the market thus rose to 3.92 percent.

On the African equity market, the Johannesburg All Shares Index sustained its uptrend with a week-on-week gain of 0.05 percent to settle at 63,549.75 points. The Nigerian All Share Index also rebounded to close the week with 2.62 percent gain. The Nairobi All Share Index also saw a 2.60 percent rise to settle at 158.19 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 55.99 55.1 -1.59 6.37
Gold $/ounce 1,835.40 1,829.90 -0.30 -3.44
Cocoa$/metric tonne 2,516.00 2,527.00 0.44 -2.92
Coffee $/pound 1.237 1.2815 3.60 -0.08
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil tumbled on account of the potential impact of rising COVID-19 cases in China on global oil demand. In the week under review, China reported the highest number of daily COVID-19 cases, with more deaths than 10 months ago. This resulted in the lockdown of Chinese cities with population of about 28 million. This sparked uncertainties with the energy commodity losing 47 cents to trade at $55.52 per barrel.

Gold lost marginally after the week’s trade on the international currency market as gains chalked from Joe Biden’s COVID-19 stimulus package of $1.9 trillion and Jerome Powell's commitment to keep monetary policy dovish was eroded by demand pressure in the bond market. The bond market, which is also considered as a safe bet, rather received high demand as some investors sold their holdings inf the yellow metal. Gold thus shed $5.50 to trade at $1,829.90 per ounce.

Cocoa staged a rebound from its 3-and-half weeks low on signs of improved demand on the global market as a group of six of the world's biggest cocoa grinders increased their buy from Ivory Coast by 3.7 percent to 49,257 MT in the week under review. Cocoa thus added $5.50 to trade at $1.31 per metric tonne.

Coffee gained after the closure of the week’s trading on the international commodities market following the outlook of the soft crop in Brazil – on of the top growers. Production is anticipated to fall by 30 to 50 percent for 2021 due to excessive heat and scant rainfall in Minas Gerais. Coffee thus gained 8 cents to trade at $1.31 per pound.

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