Weekly Highlights

• Consumer Price Inflation settled at 9.9 percent in January 2021
• Yields on short-dated treasury dropped significantly for the second consecutive week.
• Accra Bourse recorded another round of positive closure.
• Ghana cedi outmuscled both the British pound and the Euro.
• Global equity market sustained bullish outlook.
• Brent crude oil and Gold advanced but Cocoa and Coffee tumbled.

Macroeconomic update

Consumer Price Inflation settled at 9.9 percent in January 2021

Consumer Price Inflation for the month of January 2021 settled at 9.9 percent, representing 50 basis points moderation from the previous month’s rate of 10.40 percent. The rate cut was on the back of reduced inflationary pressures recorded at the food segments of the economy, as reflected in the contribution of Food to the overall inflation. According to the Data released by the Ghana Statistical Service, Food contributed 57.0 percent to the overall inflation in the month of January as against the 59.1 percent contribution in December 2020 which arose because of the festive season. On the back of this, inflation for the Food and Non-Alcoholic sector dipped by 130 basis points from 14.10 percent in December 2020 to 12.80 percent in January 2021.

Inflation at the Non-Food sector was, however, unchanged at 7.7 percent following the net-off effect witnessed within the sector. The month-on-month change in price levels for alcoholic beverages, tobacco & Narcotics jumped from 0.95 percent to 1.35 percent. Similar outturns were observed for Clothing and Footwear, and Transport sub-sectors. These were, however, subdue by the downward effects from the Housing, water, electricity, gas, and other fuels; Health Services; and Furnishers as they recorded lower month-on-month changes.

The regional break continues to record high inflationary pressures within the southern and middle belt of the country. Greater Accra Region recorded the highest inflation rate of 15.1 percent in January 2021, albeit a 120-basis points moderation from the previous month’s reading of 16.3 percent. The Ashanti and the Brong-Ahafo Regions followed with rates of 10.3 percent and 8.0 percent, respectively. Inflation was however, at its lowest in the Upper West and the Volta Regions with rates of 1.9 percent and 4.3 percent, respectively.
Illustrated below is the trend analysis of the CPI.

Key Ghana Economic Data

Indicator 2018 2019 2020 2020 2021
Target Actual Actual
Inflation CPI (y-o-y %) 9.40 7.90 11.1 10.40 9.90
Inflation PPI (y-o-y %) 4.40 13.00 n/a 7.00 n/a
Monetary Policy Rate (%) 17.0 16.00 n/a 14.50 14.50
GDP Growth (y-o-y %) 6.3 6.5 0.9 -1.1 Q3 n/a
Budget Deficit (% of GDP 3.8 4.5Sep 7.2 7.9 n/a
Public Debt (% of GDP) 57.6 63.00 n/a 68.3 n/a
Fx. Reserves (M. Cover) 3.7 4.1 ?4.0 4.0 n/a
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
Feb 15 – 19 13.23 13.96 16.86 18.50 19.25 19.85
Feb 08 – 12 13.82 14.01 16.96 18.50 19.25 19.85
Feb 01 – 05 14.06 14.09 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 significantly moderated for the second consecutive week. This comes on the back of easing uncertainties in the domestic economy coupled with efforts by the central bank in lowering the cost of capital in a bid of encouraging private sector penetration in economic activities. The yield on the 91-Day T-Bill which stood at 13.82 percent dropped by 59 basis points to settle at 13.23 percent. That on the 182-Day T-Bill also softened by 5 basis points to settle at 13.96 percent. Interest rates on the 364-Day T-Bill which settled at 16.86 percent trimmed 10 basis points. Yields on Government’s treasury Notes and Bonds were, however, unchanged as they were not part of the week’s auction.

Results of Auction held on 12th January, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 1,103.15 1,103.15 13.2322
182-Day T-Bill 121.80 121.68 13.9640
364-Day T-Bill 102.25 102.25 16.8591

A total of GHS1,327.08 million worth of bids were accepted by the Government, out of the GHS1,327.20 million bids tendered by investors. This outstripped the week’s target of GHS1,076.77 million with the 91-Day T-Bill dominating Government’s purchase by 83.13 percent. It is in the expectation of Government to raise a total of GHS773.00 million worth of bids from the issuance of the 91-Day and 182-Day T-Bills, respectively.

The term structure of the Government of Ghana treasury securities continues to show normality, and this comes on the back of the general upward slope nature of the curve. The policy directives of the Central Bank in making long-dated treasury securities comparatively attractive over their short-dated counterparts and the general robustness of the sector with equally balanced demand and supply are factors underpinning the normality of the curve.

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 11.57
GSE-FSI 49.51 -6.79 -6.23 -11.73 5.14

Trading on the Ghana Stock Exchange witnessed another round of positive closure as risk taking sentiment continue to improve. This is largely on the back of high investor optimism of economic recovery both on the domestic and the global front, as governments and policy makers adopt measures to safeguard their respective economies and human lives through a successful rollout of vaccines. At the closing bell, the benchmark Composite Index of the Ghana Stock Exchange witnessed a week-on-week gain of 5.41 percent as it settled at 2,166.29 points, corresponding to a year-to-date return of 11.57 percent. The GSE Financial Stocks Index, similarly, recorded a week-on-week rise of 0.55 percent after settling at 1,874.40 points, reflecting a year-to-date return of 5.14 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 19.29 16.03 -16.91
Total Value Traded (GHS M) 13.55 13.59 0.28
Market Cap (GHS M) 55,624.96 56,789.75 2.09

The week’s traded realized a total of 16.03 million shares valued at GHS13.59 million exchanging hands, representing 16.91 percentage point decline from the previous week’s outturn of 19.29 million valued at GHS13.55 million. MTN Ghana Ltd led the activity chart with 83.44 percent share of the overall traded volume. Despite the decline recorded in market outturns, market capitalization however surged by 2.09 percent to settle at GHS56,789.75 million on account of the general positive closure of the market.

Stock Price Movements

In all, a total of four (4) equities recorded price movements; with no laggard recorded. GCB Bank Ltd topped the bulls’ chart with 10 pesewas gain to trade at GHS4.50 per share. MTN Ghana Ltd followed suit with a price uplift of 9 pesewas to trade at 79 pesewas per share. CAL Bank Ltd and Société Générale Ghana Ltd also added 4 pesewas and a pesewa to their week’s opening prices to close at 81 pesewas and 73 pesewas per share, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 4.05 4.40 4.50 0.10 11.11
MTNGH 0.64 0.70 0.79 0.09 23.44
CAL 0.69 0.77 0.81 0.04 17.39
SOGEGH 0.64 0.72 0.73 0.01 14.06

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7570 5.7628 CAD 4.5234 4.5277
GBP 7.9562 7.9647 CFA 94.0858 94.1777
EUR 6.9651 6.9719 JPY 0.0548 0.0549
AUD 4.4547 4.4603 ZAR 0.3939 0.3943
NGN 65.9734 67.8831 CNY 0.8914 0.8922
Source: Bank of Ghana 12.02.2021

The Ghana cedi advanced against the British pound and the Euro but lost marginally to the US Dollar. The US dollar strengthened on the international forex market on account of signs of economic recovery in the region as it records upbeat macro-economic readings. The US Consumer Price Inflation surged by 0.3 percent to settle at 1.4 percent in January 2021. Weekly jobless benefits pay-outs in recent times continue to improve with only 793,000 people filling for the unemployment benefit in the week ended 6th February 2021, as against the 812,000 people who filed in the previous week. The bullish projection of the US economy rebounding to preCovid-19 levels within a year as President Joe Biden’s planned fiscal package also contributed to the resurgence of the US dollar. The US Dollar thus appreciated by 0.01 percent as it traded at GHS5.76 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 0.01 percent.

The British pound boosted its outlook on the international currency market despite the UK economy contracting in the year 2020. Overall GDP for the UK’s economy contracted by 9.9 percent, the biggest annual decline in three centuries, as the pandemic affected economic activities across all sectors of its economy. The pound’s rise was however steamed from expectation-beating GDP growth for the 4th quarter of 2020 as it grew by 1.00 percent against a forecast rise of 0.5 percent. This coupled with significant vaccination of the UK’s citizens against the pandemic lifted the pound in the week’s trade. The Pound, thus, recorded a week-on-week appreciation of 0.70 percent against the local currency as its selling price rose to GHS7.96 last Friday. The year-to-date depreciation of the cedi thus rose to 1.08 percent.

The Euro steadied on the international currency market as mixed economic data trimmed demand for the shared currency. Eurozone’s largest economy – Germany recorded a surge in its export by 0.1 percent in December 2020 against a forecast of 1 percent decline amidst renewed restrictions. The euro’s gains were, however, trimmed following a downward revision of growth forecast for the region in 2021 from an initial projection of 4.2 percent to 3.8 percent as a second wave of the pandemic put economies in new lockdowns. The Euro thus managed with a week-on-week appreciation of 0.66 percent against the cedi at a selling price of GHS6.97. The year-to-date appreciation of the cedi thus reduced to 1.37 percent.

International Market
Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,886.83 3,934.83 1.23 4.76
DJIA 31,148.24 31,458.40 1.00 2.78
FTSE 100 6,489.33 6,589.79 1.55 2.00
NIKKEI 225 28,779.19 29,520.07 2.57 7.56
FTSE/JSEAllShare 64,289.48 66,132.24 2.87 11.32
NSE All Share 41,709.09 40,439.85 -3.04 0.42
Nairobi All Share 157.11 164.02 4.40 7.83

US equities indices recorded another round of records as investors increased demand for energy, financial and materials stocks on anticipation of major recovery of the US economy on the back of the new fiscal reform measures by the US Government. This coupled with bullish earnings closed most of the indices significantly higher. The S&P 500 thus made a weekly gain of 1.23 percent to settle at 3,934.83 points. The Dow Jones Industrial Average also recorded a weekly gain of 1.00 percent as it settled at 31,458.40 points.

The London Stocks Exchange climbed further following the general positive sentiment surrounding the significant pace of progress in vaccinating the UK populace against the COVID-19 pandemics. The FTSE 100 thus registered a week-on-week gain of 1.55 percent as it settled at 6,589.79 points.

The Japanese Stocks Exchange sustained its uptrend on account of rising demand for shares within Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus ended with 2.57 percent raise to settle at 29,520.07 points.

On the African equity market, the Johannesburg All Shares Index upticked by 2.87 percent to settle at 66,132.24 points. The Nairobi All Share Index also posted a weekly rise of 4.40 percent as it settled at 164.02 points. The Nigerian All Share Index, however, eased by 3.04 percent after settling at 40,439.85 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 59.34 62.43 5.21 20.52
Gold $/ounce 1,813.00 1,823.20 0.56 -3.79
Cocoa$/metric tonne 2,587.00 2,503.00 -3.25 -3.84
Coffee $/pound 1.245 1.2085 -2.93 -5.77
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil upped its unit price on the international commodities market following the gradual uptick in global demand as China and India ease restrictions, albeit their efforts to effectively handle the pandemic. On the back of this, consumption of the energy commodity rose to its pre-pandemic levels in the Asian region supported the commodity’s gain in the week’s trade. Brent crude oil which added $3.09 to trade at $62.43 per barrel is tipped by OPEC to rise further, especially in the second half of the year as COVID-19 vaccines are expected to aid the recovery of global demand.

Gold snapped a two-week’s loss to close in the gain despite the resurgence of the US dollar and improving yields on US treasury securities which clouded-out investors’ appetite for the safe-haven asset. Yields on the US treasury notes improved in the week’s trade and this almost erased support from the economic recovery uncertainties which spurred uptrend in the yellow metal prior to last Friday’s trade. Gold thus finished with a weekly gain of $10.20 to trade at $.1,823.20 per ounce.

Cocoa tumbled to its lowest in 3 months on concern that the pandemic could shrink the demand of the soft crop. Chocolate which usually receives huge demand in the month of February is projected to dwindle with sales falling below last year’s outturn. This is largely on account of the tighter social distancing rules adopted by economies to mitigate the spread of the virus. Data by the National Retail Federation in the US shows that consumer plans to spend about $21.8 billion for this year’s Valentine Day celebration, down from the $27.4 billion spent in 2020. Cocoa thus went down by $84.00 to trade at $2,503.00 per metric tonne.

Coffee ended the trading week in the red, following concerns of a potential global stockpile of the commodity due to weak demand in the global market. Data by the International Coffee Exporters (ICE) suggested as at last Wednesday, stockpile of the soft crop rose to its highest in 8 months of 1.69 million bags which could affect the pricing of the commodity. Coffee thus went down by 4 cents to trade at $1.21 per pound.

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