• Producer Price Inflation dropped to 11.8 percent in February
• Yield on short-dated treasury securities trimmed.
• GSE ended bearish on selling pressures.   
• Ghana cedi recorded another round of weekly depreciation against the three major trading currencies.
• Global equity market made recoveries on economic stimulus policy expectations.
• Brent crude oil dropped further but Gold recorded gains.  

Macroeconomic update

Producer Price Inflation dropped to 11.8 percent in February

February’s Producer Price Inflation settled at 11.8 percent, representing 2.7 percent moderation from the January’s rate of 14.5 percent. The downtrend in the PPI follows stability of the local currency in the period under review which positively impacted on the input cost of raw and semi-raw materials needed for most Ghanaian industries. On the back of this, inflation at all segments of Ghana’s industry sector witnessed moderation with the PPI for the Mining and Quarrying sub-sector declining by 610 basis points from a previous rate of 32.2 percent to 26.10 percent in February 2020. Manufacturing sub-sector, which constitute about two-third of Ghana’s industry sector, also recorded significant moderation of 250 basis points from a previous rate 11.2 percent to 8.7 percent. The PPI at the utility sub-sector similarly dropped to 12.3 percent from a previous rate of 12.6 percent, representing a change of 30 basis points.

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.

At the close of last Friday’s auction, yields on the short-dated treasury instruments were downwardly adjusted. The yield on the 91-Day T-Bill saw 11 basis points moderation from the previous week’s rate of 14.75 percent to 14.64 percent. Interest rate on the 182-Day T-Bill which is now going for 15.15 percent, dropped by 3 basis points from the previous week’s rate of 15.18 percent. The 364-Day T-Bill also eased by 15 basis points to settle at 17.65 percent last Friday. The yields on the treasury notes and bonds were, however, unaltered as they were not allotted for the week’s auction.

Government accepted a total of GHS743.32 million worth of bids, out of the GHS906.50 million bids tendered by investors at the week’s auction. The amount raised exceeded the week’s target of GHS715.00 million with the 91-Day T-Bills dominating Government’s purchase as it constituted 67.04 percent. Government hopes to raise an amount of GHS452.00 million through the issuance of the 91-Day and 182-Day T-Bills at the upcoming auction. 

Illustrated above is the term structure of the Government of Ghana treasury bills. The yield curve sustained its normality following the marginal adjustment of rates on treasury instruments as observed at the week’s auction. The normality of the yield curve is anticipated to be sustained in the near term but with marginal rise on yields of treasury instruments as Government resorts to borrowing to raise adequate funds to fight the fast spreading of the COVID-19.

Ghana Stock Exchange

The Ghana Stock Exchange tumbled as selling pressures emanating from the COVID-19 fears toke a toll on trading activities. In the week under review, the GSE saw most of trading activities ending in the red as market speculated a potential Government actions which could affect general economic activities in the bid to control the spread of the novel disease. At the closing bell, the GSE Composite Index thus dropped by 1.16 percent as it settled at 2,160.52 points, corresponding to a year-to-date loss of 4.28 percent. The GSE Financial Stocks Index also saw 1.82 percent declines to an index level of 1,925.60 points, reflecting a year-to-date loss of 4.66 percent.   

Total volume of shares which exchanged hands in the week under review stood at 218,630 valued at GHS288,234.00. This represents 84.71 percent declines from the previous week’s outturn of 1.43 million shares worth GHS0.77 million. Ecobank Transnational Incorporated Ltd dominated the activity chart with 30.31 percent share of the overall traded volume. Market capitalization, however, dropped by 0.34 percent on account of significant sell-off recorded on the bourse to GHS55,995.00 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, no advancer was recorded. Seven equities, however, shed prices on the bourse. Ecobank Ghana Ltd was the worst performing stock. It trimmed 36 pesewas of its opening price to trade at GHS6.90 per share. Total Petroleum Ltd and Ghana Oil Company Ltd shed 10 pesewas and 8 pesewas to trade at GHS2.90 and GHS1.62 per share respectively. GCB Bank Ltd and Standard Chartered Bank Ltd had their share prices reduce by 7 pesewas and a pesewa to finish the week’s trade at GHS4.69 and GHS18.99 pesewas per share, respectively. Other laggards were CAL Bank Ltd and Société Générale Ghana Ltd.  

Currency Market

Source: Bank of Ghana 27.03.2020

The Ghana cedi dimmed its outlook on the interbank currency market as it depreciated against all the three major trading currencies. The US dollar dropped to a week low on the international currency market despite recent measures by US’ Fed to stabilise its economy. The herculean effort of US Fed by lowering interest rate to nearly zero percent, to the region of 0- 0.25 percent, extension of loans to small and large businesses; as well as buying unlimited Government’s bonds, to mitigate the harsh impact of the COVID-19 were unable to lift the greenback as jobless claims rose unprecedently. The Jobless claims for the week ended 21^st March 2020, rose to its highest of 3.283 million people, beating a historical record of 700,000 people in 1982. Despite the dollar’s loss, it appreciated by 1.44 percent as it selling price rose to GHS5.44 on the interbank currency market following the rise in demand in medical supplies in Ghana. The year-to-date appreciation of the cedi thus dropped to 1.77 percent.

The British pound made a recovery from its recent 35-year low, as investors increased their demand for the pound sterling following the daunting outlook of the greenback on the international currency market. The upward rally of the pound was also spurred by decision by the Bank of England to lower its main lending rate to a record low of 0.1 percent and indications to adopt other forms of aggressive monetary policies to avert major impact of the COVID-19 on UK’s economy. The British pound thus recorded a weekly appreciation of 5.85 percent as it traded at GHS6.70 on the interbank currency market. The year-to-date appreciation of the cedi was thus narrowed to 9.19 percent last Friday.

The Euro advanced on the international currency market, ridding on the dollar’s weakness despite some downbeat economic readings from the bloc.  Eurozone’s PMI for both the manufacturing and services sector dropped below the boom/bust 50 benchmark level to raise concerns over possible economic recession. The PMI for the Manufacturing sub-sector dropped to 44.8 points in March from February’s reading of 49.2 points whereas that of the Services sub-sector plunged to a record-low of 28.4 in March 2020 from 52.6 in the previous month with reason attributed to the widespread of business disruptions caused by the COVID-19 in the bloc. The Euro thus made a week-on-week appreciation of 4.18 percent as it traded at GHS6.00 to lower the year-to-date appreciation of the cedi to 3.57 percent.

International Markets

The US equity market closed in the gains spurred by measures adopted by the US Government to mitigate the negative impact of the COVID-19 in the US economy. The expansion of the Fed’s balance sheet by $586 billion and the successful passage of the $2 trillion economic stimulus package to quickly put the US economy into shape helped closed the bourse in the gains. The S&P 500 thus rose by 10.26 percent to close at $2,541.47 points. The Dow Jones Industrial Average also made a weekly gain of 12.84 percent to settle at 21,636.78 points.

The London Stock Exchange posted a weekly gain buoyed by the strong recovery of oil and energy sector stocks. Investors’ digestion of the massive economic stimulus package in the US increased the global demand for energy sectors leading to the positive closure of the market. The FTSE 100 thus made a week-on-week gain of 6.16 percent as it settled at an index level of 5,510.33 points.

The Nikkei 225 finished the week’s trade in the gains lifted by investors expectation that other advance economies would adopt stimulus economic policies as implemented by the US government in the bid of combating the COVID-19 pandemic. This anticipation led to demand pressure in shares of Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus recorded a weekly rise of 17.14 percent to settle at 19,389.43 points.

On the African equity market, the Johannesburg All Share Index posted a weekly gain of 6.64 percent as it ended the week’s trade at an index level of 42,946.83 points. The Nigerian All Share Index, however, fell by 1.52 after the week’s trading activities to 21,861.78 points. The Nairobi All Share Index also declined by 4.24 to close the week’s trade at 127.30 points.

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

Brent crude oil posted another round of weekly loss on the international commodities market as demand slips amid supply concerns. The disruption in major economic activities has significantly affected global demand for oil, amidst the ongoing price-war between Russia and Saudi Arabia which has resulted in supply glut on the global market. Brent crude oil shed $2.05 to end the week’s trade at $24.93 per barrel.

Gold finished the trading week in the gains spurred by the rising demand for the safe-haven commodity and the artificial shortages caused by the current disruption in the gold supply chains as global travels grinds to a halt. The yellow metal rose to its highest in 12 years after adding $140.40 to its opening price to sell at $1,625.00 per ounce.

Cocoa rose marginally on the international commodities market as the global traveling bans affected the supply of the soft crop. Cocoa beans which is tipped to be in abundant in top grower – Ivory Coast as favourable climatic conditions returns is likely to record price surge on the international commodities market following the global traveling restrictions. Cocoa thus added $27.00 to close at $2,257.00 per metric tonne.

Coffee tumbled on developments attributed to technical corrections on the international commodities market. The soft crop which rose to two-and-half-months high a week ago on speculative trading activities, dropped following market forecast that productions in Vietnam and Brail could be much-better-than expected. Coffee thus eased by 4 cents to close at $1.16 per pound.

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