Weekly Highlights

• Yields on 182-Day and 364-Day T-Bills eased further.
• Accra Bourse posted mixed outturn with benchmark index sustaining bullish run.
• Ghana cedi outperformed all the three major trading currencies.
• London Stock Exchange closed in the red as investors shifted focus on Government Bonds.
• Coffee surged as global supply of the commodity anticipated to drop.

Macroeconomic update

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 9.10
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
Mar 01 – 05 13.27 13.89 16.80 17.60 19.25 19.85
Feb 22 – 26 13.11 13.95 16.86 17.60 19.25 19.85
Feb 15 – 19 13.23 13.96 16.86 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 witnessed mixed adjustment, with yields on the 182-Day and 364-Day T-Bills recording further cuts. This forms part of Government’s effort to reduce cost of capital to boost the recovery of the domestic economy. The yield on 182-Day T-Bill dropped by 6 basis points to settle at 13.89 percent from a previous rate of 13.95 percent. That on the 364-Day T-Bill also went down by 6 basis points to settle at 16.80 percent. Interest rates on the 91-Day T-Bill, however, upped by 16 basis points to 13.77 percent. Yields on the Government of Ghana Treasury Notes and Bonds were, however, unchanged as it was not scheduled for the week’s issuance.

Results of Auction held on 26th February, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 1,168.58 1,013.90 13.2690
182-Day T-Bill 124.38 124.38 13.8918
364-Day T-Bill 235.26 235.26 16.7951

Government accepted GHS1,373.54 million worth of bids out of the GHS1,528.22 million bids tendered by investors. Thus, a total of GHS154.68 million bids, representing 10.10 percent of the tendered bids were rejected by the Government. The week’s target of GHS889.00 million was far exceeded in excess of GHS484.54 million, with the 91-Day T-Bill dominating Government’s purchase by 73.82 percent. Government anticipates raising a total of GHS1,252.00 million worth of bids from the issuance of 91-Day, 182-Day, and 364-Day T-Bills next week.

The term structure of the Government of Ghana, as illustrated in the above diagram, sustained its normality as recent trends in rate moderations were unable to alter the upward trend of the curve but rather improved the gradient of the curve. The rate moderation observed in recent times comes on the back of effort to boost private sector penetration as interest rates cuts could trigger a downward review of the policy rate, which in turn, will bring average lending interest rates down to boost spending in the form of private sector investment. This is expected to contribute to the improvement of the outlook of the economy.

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 13.36
GSE-FSI 49.51 -6.79 -6.23 -11.73 5.08

The Ghana Stock Exchange sustained the uptrend of its benchmark index after recording its first positive closure on the last trading session of the week. This was on the back of capital appreciation in shares of MTN Ghana last Friday, which helped overturn a five-consecutive flat trading sessions. At the closing bell, the GSE Composite Index thus recorded a week-on-week upsurged of 1.08 percent after settling at 2,200.92 points, corresponding to a year-to-date return of 13.36 percent. The GSE Financial Stocks Index was, however, unchanged at 1,873.31 points as the recent demand pressures for shares in CAL bank Ltd and Standard Chartered Bank Ltd were missing in the week’s trade. The year-to-date return of 5.08 percent of the Index was thus maintained.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 1.85 7.34 297.16
Total Value Traded (GHS M) 1.75 6.33 261.43
Market Cap (GHS M) 56,906.39 57,152.18 0.43

Market activities was an improvement over the previous week’s record. A total of 7.34 million shares valued at GHS6.33 million changed hands, representing about 300 percent increment in terms of volume over the previous outturn of the market. MTN Ghana Ltd and Guinness Ghana Brewery Ltd were the most actively traded stocks, jointly accounting for 95.88 percent of the overall traded volume. Market Capitalization also improved by 0.43 percent at GHS57,152.18 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, MTN Ghana Ltd and New Gold Ltd were the only stocks that altered their share price. MTN Ghana Ltd added 2 pesewas to trade at 82 pesewas per share. New Gold Ltd, on the other hand, dropped by GHS4.90 to trade at GHS100.60 per share.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
MTNGH 0.64 0.80 0.82 0.02 28.13
GLD 105.50 105.50 100.60 -4.90 -4.64

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7345 5.7403 CAD 4.5294 4.5341
GBP 7.9899 7.9991 CFA 94.2724 94.3714
EUR 6.9508 6.9581 JPY 0.0539 0.0539
AUD 4.4488 4.4547 ZAR 0.3806 0.3810
NGN 70.9799 71.5446 CNY 0.8855 0.8864
Source: Bank of Ghana 26.02.2021

The interbank currency market ended with the Ghana cedi outperforming all the three major trading currencies as it rode on the bi-weekly forex auction initiative adopted by the central bank to stabilise the currencies from extensive free fall. The US Dollar, on the international currency, ended bullish as it benefitted from the unprecedented rise in US treasury yields. Interest rate on the 10-Year US treasury bond surged above the 1.6 percent mark, the first of its kind in twelve months following investors’ optimism for a tightening monetary policy ahead of Fed’s meeting. The greenback further upped its value on account of the fast pace in vaccination of the US population and hopes of a shorter economic rebound. In spite of the US dollar’s gains, it depreciated against the Cedi as the latter gained support from the domestic forex injection. The US dollar thus depreciated by 0.37 percent, lowering its selling price to GHS5.74 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 0.40 percent.

The British pound stepped up its rally, posting its best performance in 34 months on the international forex market. The pound sterling gained another round of support from the recently trade deal with the European Union, the rapid rollout of the COVID-19 vaccines and signs of economic recovery. The UK’s Government’s intention to increases its expenditures in 2021 as it ramp up extra taxes to address the public finance deficits also supported the sterling to stimulate market sentiment in the week’s trade. In spite of this, the British Pound depreciated by 0.96 percent as its selling price trimmed to GHS8.00. The year-to-date depreciation of the cedi thus reduced to 1.51 percent.

The Euro posted a sterling performance on the international currency market riding on upbeat economic data to register its best performance in seven weeks. Eurozone’s inflation for the first time in six months increased by 0.9 percent in January year-on-year against a deflation of 0.3 percent recorded in December 2020. Bullish macroeconomics readings from Eurozone’s largest economy – Germany also boosted the appeal of the single currency. Germany’s business confidence rose to a four month high in February at 92.4 points from the 90.1 points recorded in January. Germany’s GDP was upwardly revised from a previous estimate of 0.01 percent growth to 0.3 percent during the 4th quarter of 2020. This therefore puts the overall economic growth for Germany at negative 4.9 percent from a previous estimate of negative 5 percent. Despite this outturn of the Euro, it recorded a week-on-week depreciation of 0.39 percent at a selling price of GHS6.96. The Cedi thus ended with a year-to-date appreciation of 1.57 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,906.71 3,811.15 -2.45 1.47
DJIA 31,494.32 30,932.37 -1.78 1.06
FTSE 100 6,624.02 6,483.43 -2.12 0.35
NIKKEI 225 30,156.03 28,966.01 -3.95 5.55
FTSE/JSEAllShare 67,464.86 66,138.05 -1.97 11.33
NSE All Share 40,186.70 39,799.89 -0.96 -1.17
Nairobi All Share 165.55 165.39 -0.10 8.73

US stock market snapped a three week’s rally on profit taking activities which resulted in a massive sell of energy stocks on the Bourse. The anticipation that OPEC could ease its production cut restrictions, coupled with production interruptions by cold temperatures, sparked heavy selloffs of energy sector stocks on the US Bourse. The S&P 500 thus ended with a week-on-week fall of 2.45 percent to settle at 3,811.15 points. The Dow Jones Industrial Average, similarly, recorded 1.78 percent decline as it settled at 30,932.37 points from previous week’s mark of 30,932.37 points.

The London Stock Exchange pulled back following the sudden surge in yields on Government Bonds which drifted investors’ appetite from stocks in the week’s trade. The significant surge was on account of dovish sentiment on inflation outlook by the Bank of England’s Chief Economist – Andy Haldane. The British 10-Year Bond rose to its highest in a year to 0.816 percent with similar upbeat performance on the 5-Year and 2-Year Bonds. The FTSE 100 thus went down by 2.12 percent to settle at 6,483.43 points.

The Japanese Stock Exchange closed the week in the red following selloffs in stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus went down by 3.95 percent to settle at an index level of 28,966.01 points.

On the African equity market, the Johannesburg All Shares Index dropped by 1.97 percent to index point of 66,138.05 points. The Nigerian All Share Index posted a week-on-week decline of 0.96 percent to settle at 39,799.89 points. The Nairobi All Share Index, also tumbled by 0.10 percent to settle at 165.39 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 62.91 66.13 5.12 27.66
Gold $/ounce 1,777.40 1,728.80 -2.73 -8.78
Cocoa$/metric tonne 2,535.00 2,701.00 6.55 3.76
Coffee $/pound 1.275 1.3685 7.33 6.71
Source:www.bloomberg.com, & www.investing.com -

Brent Crude Oil finished the week’s trade in the gains despite pulling from a 22-month high on the last trading day of the week. The resurgence of the US dollar, coupled with jitters ahead of the upcoming OPEC meeting where members are expected to agree to the easing of the existing production cut restrictions initiative, is responsible for this gain. This trimmed earlier gains from arising from the threat of unfavourable climatic conditions on global production. Brent crude oil recorded a week-on-week gain of $3.22 to trade at $66.13 per metric tonne.

Gold dipped after the week’s trading on the international commodities market as most investors took advantage of the easing uncertainties associated with the pandemic to revalue their asset holdings. This sparked a drift and heavy selloff of the yellow metal for other high yield assets. Gold thus went down by $48.60 to settle at $1,728.80 per ounce.

Cocoa rose further to a 2-and-half months high on speculative trading activities, as the market anticipates a rebound in chocolate demand as the global pandemic regresses. This eased concerns of high production of the soft crop in top grower – Ivory Coast which could have negatively affected the value of the beans. Cocoa thus added $166.00 to trade at $2,701.00 per metric tonne.

Coffee climbed further as contracting supply from Brazil created an imbalance on the global commodities market. Data from the Brazilian Agency – Rabobank – Coffee production is anticipated to reduce to about 36 million bags in 2021 from an initial forecast of 37.2 million due to dry climatic conditions in Brazil. On account of this, Coffee availability on the international market is anticipated to be in a deficit of -2.6 million bags for the 2021/22 from a previous projection that suggested 10 million bag surpluses. Coffee thus added 9 cents to close at $1.37 per metric tonne.

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