Weekly Highlights
• June 2021 Producer Price Inflation is at 10.1 percent.
• The GSE inched up its YTD gains
• Ghana cedi gained value against the Pound and the Euro
• Major international stock indices rebound in the week’s trades.
• Gold eased marginally on the international commodity market.

Macroeconomic Update

Producer Price Inflation settled at 10.1 percent in June 2021

The Producer Price Inflation (PPI) for the month of June 2021 is at 10.1 percent, weighed by the Manufacturing sub-sector, which saw a 1.7 percentage points decline from the 11.8 percent recorded for the month of May 2021. The rate of moderation follows year-on-year (June 2020 and June 2021), lower input cost across all industry with a focus on the Mining and Quarrying, and Manufacturing and Utilities sub-sectors of the economy. The PPI for the Mining and Quarrying sub-sector dropped by 3.2 percent against the May 2021 rate of 12.7 percent to settle at 9.5 percent in June 2021. The Manufacturing sub-sector, weighing over 60 percent of the total industry, inched down by 1.8 percentage points to record 12.8 percent while the Utility sub-sector recorded no change in inflation rate for June 2021. Below is the representation of the PPI trends.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8.00 7.80
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 10.1
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 13.50
GDP Growth (y-o-y %) 6.3 6.5 0.4 5.00 3.1
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 2.6 Q1
Public Debt (% of GDP) 57.6 63.00 68.3 n/a n/a
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 n/a
Source: BOG; MOFEP; GSS.

Government of Ghana Treasury Securities

Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Jul 26 – Jul 30 12.56 13.36 16.40 17.60 17.70 18.80
Jul 19 – Jul 23 12.56 13.36 16.32 17.60 17.70 18.80
Jul 12 – Jul 16 12.56 13.37 16.32 17.60 17.70 18.80
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.

Last Friday’s GoG Treasury auction ended with interest rates on Treasury securities, at the back end of the yield curve, staying still. Yields on the 91-Day and 182Day T-Bills remained at 12.56 percent and 13.36 percent, respectively, whiles that on the 364-Day T-bill lifted by 8 basis points to settle at 16.40 percent. Yields on the GoG Bonds and Treasury Notes remained unchanged, as they were not scheduled for the week’s auction.

Results of Auction held on 23rd July, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 827.86 827.86 12.5625
182-Day T-Bill 184.14 184.14 13.3634
364-Day T-Bill 844.30 844.29 16.3983

At the close of the auction, Government accepted all the GHS 1,856.30 million worth of bids tendered in by investors for the 91-Day, 182-Day, and 364-Day Bills, exceeding the week’s target by GHS 837.30, with sale of the 364-Day security dominating Government purchases. For the upcoming auction, Government seeks to raise GHS 630 million from the sale of the 91-Day and 182-Day Bills.

The yield curve held up its normality with no movement in rates at the short-dated ends. This trend is projected to hold up due to the policy intent of the central bank to reduce the frequency of interest payment, whiles wooing investors to bid for the long-dated instruments, given their favourable return potential. This development is projected to aid the private sector’s contribution to economic development, as it seeks to results in cheaper cost of capital.

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 36.53
GSE-FSI 49.51 -6.79 -6.23 -11.73 6.05

The Accra bourse experienced a rebound in its year-to-date performance, as the GSE Composite Index raised by 13 basis points bouyed by gains in some blue-chip stocks to close the week at 2,650.92 points. This represents a 36.53 percent year to date return to shareholders. The GSE Financial Stock Index, however, remained flat at an index level of 1,890.61 point, with a year-to-date return of 6.05 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 2.48 8.43 240.59
Total Value Traded (GHS M) 2.91 11.45 293.89
Market Cap (GHS M) 61,524.01 61,551.37 0.04

Trading activities improved over the previous week’s outturn as more shares exchange hands. A total of 8.43 million shares valued at GHS 11.45 million traded in sixteen equities. MTNGH held up its bullish run leading in total volume traded by 85.16 percent, representing 75.25 percent of total value of stocks traded at the close of week. The market capitalization, thus, inched up marginally by 0.04 percentage points to close the week at GHS 61,551.37 million.

Stock Price Movements

At the closing bell, 3 stocks registered price adjustments: 2 advancers and a loser. Guinness Ghana Breweries PLC lifted its value by 12 pesewas to end the week at GHS1.41, per share. Fan Milk Ghana Ltd also added 0.02 pesewas from last week’s gain to close at GHS1.37 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
GGBL 0.90 1.29 1.41 0.12 56.67
FML 1.08 1.35 1.37 0.02 26.85

At the losing side, Unilever Ghana PLC extended its bearish trend trimming 19 pesewas of its share value to end the week at GHS 2.00, per share, translating to 75.7 percent year-to-date loss to its equity holders.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change YTD (%)
UNIL 8.29 2.19 2.00 -0.19 -75.87

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7974 5.8032 CAD 4.6113 4.6157
GBP 7.9625 7.9716 CFA 96.0209 96.1165
EUR 6.8131 6.8197 JPY 0.0525 0.0525
AUD 4.2731 4.2785 ZAR 0.3909 0.3911
NGN 70.7653 71.0480 CNY 0.8946 0.8950
Source: Bank of Ghana 25.05.2021

The US dollar held on to its sterling performance in the international forex market against its major peers. The dollar index, which measures the greenback against a pool of six major currencies, rose marginally on Friday at 92.877 to close the week inching up by 0.2 percentage points. This is after rising by 0.6 percent last week on the back of safe-haven bids, as investors feared the surge in the delta variant infections could outsmart economic recovery on the global front. Investors remain focused, as Fed’s two-day policy meeting this week is expected to advance discussions for a tapering of stimulus. The greenback, thus, lowered its weekly appreciation against the local currency to 0.07 percent at a selling price of GHS 5.80 to record a year-to-date gain of 0.69 percent.

The Pound Sterling continued its bearish run on the international forex market in the face of higher than anticipated retail sales data, as investors assess the risk of a surge in Covid-19 cases, with its impact on UK’s food and travel sub-sectors of the economy. Official data released on Friday showed British retail sales are bouncing back to post-lockdown levels, inching up by 0.5 percent in June from a moderation in May 2021. Composite Purchasing Managers' Index (PMI) released on Friday was at 57.7, a dip from the 62.2 recorded in June 2021 and lower than forecasted 61.9. This shows that deteriorating levels of purchasing managers’ activities in July among sectors of the economy, weighed on the sterling’s rise. The Pound, thus, recorded a 0.13 percent depreciation against the cedi, settling at a selling price of GHS 7.97.

The Euro went south on the international forex market week’s trade, hovering around its weakest level since April and heading for a 0.6 percent monthly loss, amid anticipation that the European Central Bank (ECB) will remain dovish for some time and as worries about the spread of the Delta variant continue to linger. The ECB pledged last week to keep interest rates at record-low levels for even longer to pull inflation back to its 2 percent target, as ECB President Christine Lagarde warned about a fresh wave of the coronavirus pandemic and its impact on the economic recovery. The shared currency thus extended its depreciation by 0.45 percent to bring its selling price to GHS 6.82 on the interbank currency market. The year-to-date appreciation of the cedi thus increased to 3.63 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,327.16 4,411.80 1.96 17.46
DJIA 34,687.85 35,061.69 1.08 14.56
FTSE 100 7,008.09 7,027.58 0.28 8.78
NIKKEI 225 28,003.08 27,548.00 -1.63 0.38
FTSE/JSEAllShare 66,529.53 68,063.69 2.31 14.57
NSE All Share 37,947.18 38,667.90 1.90 -3.98
Nairobi All Share 178.65 178.98 0.18 17.66

Trading on Wall Street ended the week with all three major stock indices closing at a record high on Friday, aided by upbeat earnings record by mega caped stocks, after a bumpy week. This is on account of investors’ fears over the fast-spreading delta variant of covid-19 and its impact on economic recovery, amid rising yields on US Treasury securities, ahead of Fed’s meeting next week. Investors are keenly awaiting Fed’s policy direction towards US economic recovery and timelines for the central bank to cut support to the economy. Report released by IHS Markit on Friday showed business activities in the US grew moderately for a second straight month in July, despite supply side hitches suggesting a cooling in economic activities in the world largest economy. The S&P 500 rose by 1.96 percentage points week-on-week to close at 4,411.80 points, whiles the Dow Jones Industrial Average also appreciated by 1.08 percent to end the week at 35,061.69, points with a 14.56 percent year-to-date investor returns.

The London Bourse ended the trading week with the FTSE 100 bouncing back on Friday to end the volatile week on a high note, lifted by sterling performance of listed tech stocks as investors project a brighter outlook to global economic recovery and continued cushion from the Bank of England. Available data shows that British sales rose by 0.5 percent in June, beating market projections, an uptick by 9.5 percent against the pre-pandemic level in February 2020, as consumer confidence improved in July 2021. PMI survey, however, showed a decline in growth of British business activities. The FTSE 100 added 19.49 points week-on-week to settle at an index level of 7,027.58.

The Japanese market staged a rebound as the Nikkei 225 surged by 445 points on Wednesday, ahead of the 2-day public holiday from losses at the previous days of the trading week. Investors took to risk appetite as data showed Japanese exports climbed more than 48 percent year-on-year for a three-straight month in June while imports rose higher than was estimated, advancing in five months. On the week-on-week basis, the Nikkei 225 eased by 1.63 percentage points to close the week at 27,548.00 points.

On the African market, the Johannesburg All Share Index inched up further by 2.31 percentage points week-on-week to end at 68,063.69 points. The Nigerian and Nairobi All Share Indices also lifted their values on a week-on-week basis to settle the week’s trades at 38,667.90 and 178.98 points, respectively.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 73.59 74.1 0.69 43.05
Gold $/ounce 1,815.00 1,801.80 -0.73 -4.92
Cocoa$/metric tonne 2,320.00 2,321.00 0.04 -10.83
Coffee $/pound 1.612 1.890 17.25 47.37
Source:www.bloomberg.com, & www.investing.com

Brent crude oil edged lower at the end of the trading week, after firming up above the $70 per barrel, bouncing back from Monday’s downtrend to the lowest levels since May on the back of concerns about the fast-spreading delta variant of Covid-19 cases. This suggests a gloomy outlook on the demand side. Data from the Centre for Disease Control and Prevention on Thursday showed a 7-day moving average of fresh cases in the US upped 53 percent, from the previous week, with the delta variant recording over 80 percent nationwide. A final agreement reached by OPEC+ and its allies to increase supply by an additional 400,000 barrels a day monthly, as they look forward to a full reversal of supply limits imposed at the onset of the pandemic, fuelled the dip in the black gold’s value on the international commodity market. Brent crude oil thus added 51 cents week-on-week to close the market at $74.10 per barrel.

Gold lowered its value on the international commodity market, buoyed by the dollar’s bullish run and investors shifting focus to earnings, as treasury yields lift on the wake of concerns over the rapid spread of the coronavirus delta variant and its impact on the global economy remain in the spotlight, creating room for upside momentum. The yellow metal thus eased more than $13 to end the week’s trade at $1,801.80, per ounce.

Cocoa edged higher on the global market despite fears that the global pandemic is making a return through the highly transmissible Delta variant, a potential threat the world’s economy. Cocoa futures traded on ICE settled at $2,254 a tonne on Tuesday, representing 0.7 percent rise from the previous session, and lower than the $2,373 price on July 14, a day before the release of North American cocoa grinds data that typically moves the market. Cocoa thus raised its market price by $1 to close the week’s trade at 2,321.00 per metric tonne.

The value of coffee continued its upward rally on the global markets reaching its highest levels since 2014 as extreme cold weather hit the southern part of Mina Gerais - Brazil’s major coffee growing region with temperatures falling below zero degrees Celsius and causing frost and freeze. Weather forecasts showed the condition could linger pushing prices to higher levels, should traders predict a broader damage as demand will outwit supply levels. The soft hence raised its market value by 17.25 percent to end the week at $1.890 per pound.

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