• Producer Price Inflation at 13.00 percent.
• Yield on 364-Day upped by 3-basis points.
• GSE recorded its first week-on-week gain since beginning of 2020.
• Cedi advanced against both the US dollar and Euro.  
• Brent crude oil down on China’s coronavirus epidemic.  

Producer Price Inflation at 13.00 percent

Producer Price Inflation (PPI) for the year ended 2019 settled at 13.00 percent, representing a sharp increment over the 2018 end of year rate of 4.40 percent. Significant depreciation of the local currency in 2019 and the heavy dependence of the domestic economy on importations are major factors attributed to the PPI rise. For instance, total depreciation of the cedi widened in 2019 to 12.90 percent as compared with a depreciation of 8.39 percent recorded in 2018.

The December’s PPI represents a 3.1 percentage point rise over November’s figure of 9.90 percent, and this is attributed to inflationary pressures within the manufacturing sub-sector which constitutes about two-third of the entire industry sector. The PPI for the manufacturing sub-sector abruptly upped by 4.3 percentage points to settle at 8.8 percent in December 2019 following the sectors’ high dependence on international raw and semi-raw input materials. PPI at the utilities sub-sector also slightly rose by 0.2 percentage point to settle at 12.6 percent. The PPI at the mining and quarrying sub-sectors, however, moderated to 33.7 percent from a previous rate of 33.9 percent. Illustrated below is the one-year-trend analysis of the PPI:

Source: BOG; MOFEP; GSS.     * represents provisional estimate

Government of Ghana Treasury Securities

NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rates on the Government of Ghana treasury securities recorded marginal adjustments after the week’s auction. The yield on the 91-Day T-Bill recorded a basis point decline to settle at 14.69 percent. The yield on the 182-Day also saw 2 basis points reduction to settle at 15.15 percent but that on the 364-Day T-Bill rose by 5 basis points to 17.83 percent. Yield on the treasury notes and bonds were, however, unaltered as they were not scheduled for the week’s auction. 

At the auction, Government accepted all the GHS925.48 million worth of bids tendered by investors. The GHS925.00 million target for the week’s auction was slightly exceeded but fell short of the GHS2.32billion worth of bids accepted by Government at the previous week’s auction. In the week’s auction, the 91-Day T-Bill dominated Government’s purchases, constituting 76.59 percent of the overall bids accepted. Government’s target for the upcoming auctions is GHS1,649.00 million through the issuance of both the 91-Day, 182-Day and 364-Day T-Bills respectively.

Illustrated in the diagram above is the yield curve of the Government of Ghana treasury securities. Despite the interest rate adjustment recorded at the week’s auction, the yield curve sustained its normality as yields on long-dated treasury instruments continued to be generally attractive than their short-dated counterparts which protects investors investment. The market is however, expected to correct yields on the 3-year and 5-year bonds to smoothen the yield curve and attract funds for Government to undertake longer term investment opportunities. 

Ghana Stock Exchange

The Accra Bourse recorded its first positive week-on-week gain as investors increased their demand for undervalued stocks ahead of dividend declaration by some listed companies. At the closing bell, the GSE Composite Index thus posted a week-on-week rise of 0.37 percent as it settled at an index level of 2,248.75 points, reducing its year-to-date loss to 0.37 percent. The GSE Financial Stocks Index similar, recorded a week-on-week rise of 1.72 percent to settle at 2,042.34 points, corresponding to a year-to-date gain of 1.12 percent.     

Following the positive closure of the market, total traded stocks improved over the previous week’s outturn. A total of 42.03 million shares valued at GHS33.60 million exchanged hands in the week under review as compared to the 8.43 million stocks valued at GHS7.84 million traded in the previous week. MTN Ghana Ltd dominated the activity chart, accounting for 95.86 percent of the overall traded volume. On the back of the positive closure of the market indices, total market capitalization saw 0.82 percent rise to settle at GHS57,093.45 million.

Stock Price Movements

At the paring of the week’s opening and closing prices, a total of 6 equities appeared on the advancers list with 4 equities on the laggards list. New Gold led the bulls run with price uplift of 30.50 pesewas to trade at GHS84.50 per share. Standard Chartered Bank Ltd had its share price rising by 62 pesewas to trade at GHS18.62 per share. Ecobank Ghana Ltd and Ghana Oil Company Ltd advanced by 15 pesewas and 4 pesewas to trade at GHS7.90 and GHS1.78 per share respectively. Other advancers were Ecobank Transnational Incorporated Ltd and Standard Chartered Bank Preference Share.

On the flip side, GCB Bank Ltd was the worst performing stock, losing 2 pesewas of its opening price to trade at GHS5.08 per share. CAL Bank Ltd and Enterprise Group Ltd trimmed their share prices by a pesewa each to close at 98 pesewas and GHS1.64 per share respectively. MTN Ghana Ltd also went down by a pesewa to trade at 68 pesewas per share.

Currency Market

Source: Bank of Ghana 24.01.2020

The interbank currency market ended with the Ghana cedi advancing against both the US dollar and the Euro but depreciating versus the British pound. The US dollar slightly depreciated on account of mixed economic data and negative implications of the fast spreading coronavirus from China to the US. US consumer spending recorded a seasonally adjusted growth of 0.03 percent over the previous month’s rate as it settled at 0.5 in December, the strongest pace of growth in five months. Home sales in the world’s largest economy also grew by 3.6 percent to 5.54 million, representing its best in 2 years but were unable to spark gains in the greenback. Declines in annual average wage growth from 3.3 percent in 2018 to 2.9 percent in 2019 and projections by the US’ Bank of America Securities for a depreciation of the US dollar in 2020 following signs of economic recovery in rivalling nations, however, weighed on the dollar’s outturn. The US dollar thus recorded a week-on-week depreciation of 0.14 percent as it reduced its selling price to GHS5.53 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 0.13 percent.

The British pound ended the trading week in the gains ahead of the Bank of England’s monetary policy review on interest rate. Upbeat data from UK’s labour market with unemployment rate dropping to its lowest in four decades eased worries on UK’s economy ahead of its final exit from the eurozone. UK’s labour market dropped to 3.8 percent in December 2019, representing a 0.2 percent fall from the 2018 rate. This coupled with expectations of bullish outturns in UK’s factory and services growth propelled the rise in the pound. The British pound thus made a week-on-week appreciation of 0.21 percent as its selling price jumped to GHS7.23 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 1.28 percent.

The Euro was knocked down by the dovish outcome of the recently held monetary policy review of the European Central Bank. The decision to leave interest rate unchanged at zero due to historical data showing signs of economic recession and embarking on a review of its current monetary policy strategy drove the single currency to its lowest in seven-weeks. This followed the fact that such initiatives could thwart efforts in bringing inflation close to the 2 percent benchmark. The Euro thus depreciated by 0.76 percent to trade at GHS6.10 on the interbank currency market. The year-to-date appreciation of the cedi advanced to 1.93 percent.

International Markets

The global equity market tumbled, with most Bourses hovering near three to four months low as the emergence of the deadly coronavirus was deemed risk taking. This also made market participants wary of its potential negative impact on global economic activities, resulting in significant selling of their shareholdings.

On the US equity market, the S&P 500 and Dow Jones Industrial Average recorded their worst weekly performance since August 2019 losing 1.03 percent and 1.22 percent respectively. The S&P 500 thus ended the trading week at 3,295.47 points whereas the Dow Jones Industrial Average ended the week at 28,898.73 points.

The FTSE 100 ended the trading week at 7,585.98 points, representing 1.15 percent declines from the previous week’s outturn. This followed heavy selling of stocks within the mining and tourism-related stocks with Evraz PLC, Anglo American Plc and Rio Tinto Plc losing 5.1 percent, 4.6 percent and 4.2 percent of its share values respectively.

The Nikkei 225 closed 0.89 percent lower to settle at 23,827.18 points owing to the sell-off in tourism related stocks and dwindling export data from the Japan’s economy which fell by 6.3 percent in December 2019.

On the African market, the Nigerian All Share Index recorded a weekly decline of 2.95 percent to settle at 57,261.04 points. The Nairobi All Share Index also fell by 0.75 percent to settle at an index level of 164.98 points. The Nigerian All Share Index, however, ended with a week-on-week rise of 0.03 percent as it improved to an index level of 29,628.84 points.

Source:www.bloomberg.com, & www.investing.com

Brent crude oil ended the trading week in red as the fast spreading coronavirus in China, which led to the banning of travel activities, affected the outlook of the energy commodity. Slowdown in economic activities in China overshadowed OPEC’s supply cut decision resulting in the losses of the commodity. Brent crude oil thus went down by $4.16 to trade at $60.69 per barrel.

Gold recorded a marginal gain as the growing concerns on China’s deadly virus affected its outlook. The World Health Organisation’s decision to hold until concreate evidence are established before declaring the situation as a global emergency sparked uncertainty to reduce the demand of the yellow metal. Gold thus upped by $11.60 to trade at $1,571.90 per ounce.

Cocoa dropped on the international commodities market following fear that some farmers may evade the supply tightening policy in Ivory Coast. Ivory Coast was called for support from the World Bank to help eliminate all illegal cocoa output from its protected forest by resettling such farmers. This is expected to end deforestation and deter excess cocoa production which could destabilised the price ceiling agenda. Cocoa thus fell by $64.00 to trade at $2,733.00 per metric tonne.

Coffee recorded another round of week-on-week decline as the market struggles to correct after last December’s speculations which artificially inflated its price on the international commodities market. Coffee thus shed 2 cents to end the trading week at $1.10 per pound.

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