• March Inflation unchanged at 7.8 percent.
• Interest rates on GoG securities eased, 3-Year Bond now at 19 percent.
• The GSE extended bearish run on significant selling pressure.
• The Ghana Cedi lost grounds to both the US dollar and the British Pound.
• Cocoa surged on supply cut on the international commodities market.

Macroeconomic update

March Inflation unchanged at 7.8 percent

Consumer inflation for the month of March 2020 stood at 7.8 percent, unchanged from the previous month’s reading. The stability of the inflationary pressure followed significant changes in the sub-sectors of Ghana’s economy. The significant surge in inflationary pressures at the Food and non-alcoholic segments of the CPI as subdued the declining inflation at the Non-food segments amidst the COVID-19 fears. Inflation at the Food and non-alcoholic beverages sector upped by 50 basis points from the previous month’s rate to 8.40 percent, the highest rise since the rebasing of the CPI last year due to the sharp rise of prices of Vegetables, Fruits and Nuts in the period under review. Inflation for the Non-food segment of the economy, however, dwindled by 30 basis points to 7.40 percent in March as inflation at electricity, electric appliances for personal care, cars and sport equipment dropped to their negatives. At the regional levels, Volta Region had the highest inflationary reading of 9.2 percent, followed by the Eastern Region and the Western Region. The Upper West and East Regions, however, had the least rise in prices of 3.7 percent and 4.6 percent respectively. Presented below is one-year trend analysis of the CPI.

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 witnessed another round of moderation in the week under review. The yield on the 91-Day T-Bill was slashed by 3 basis points to settle at 13.85 percent. The 182-Day T-Bill eased by 14 basis points to settle at 13.99 percent whereas that on the 364-Day T-Bill remained unchanged at16.79 percent as it was not scheduled for the week's auction. Interest rate on the 3-Year Bond also moderated at the auction by 175 basis points to 19.00 percent. The yields on the other Government of Ghana treasury bonds and notes were, however, unaltered as they were not scheduled for the week’s auction.

A total of GHS509.54 million bids were accepted by the Government at the week’s auction out of the GHS757.27 million tendered by investors. This was below the week’s target of GHS677.00 million and below the GHS1.63 billion raised at the previous auction. Government also raised a total of GHS849.24 million from the insurance of a 3-Year bond, bringing total bids accepted to GHS1.36 billion. An amount of GHS1.21 billion is scheduled to be raised from the sales of the 91-Day, 182-Day and 364-Day T-Bills at the upcoming auction.

The yield curve sustained its normality but with rate moderation on the short-dated treasury securities. The recent downtrend follows risk aversion of investors due to the slowdown in economic activities stimulating a rise in demand for Government securities. The downtrend is expected to contribute to the deepening of private sector participation, but a severe decline could blur the economic outlook of the country, as it could result into a flatten or inverted curve which signals recession.

Ghana Stock Exchange

The Ghana Stock Exchange extended its bearish run following the significant selling pressures witnessed in blue-chip stocks within the financial sector in the week under review. As investors demand for liquidity surges amidst the uncertainties posed by the COVID-19 pandemic, declining stocks prices were mostly recorded in the week’s trades. At the closing bell, the GSE Composite Index, thus dropped by 134 basis points to an index level of 2,106.58 points, representing a year-to-date loss of 6.67 percent. The GSE Financial Stocks Index, similarly, fell by 276 basis points to 1,828.13 points corresponding to a year-to-date loss of 9.48 percent. 

A total of 1.00 million shares valued at GHS1.50 exchanged hands in the week under review. This represents over two hundred percent increment over the previous week’s traded volume. CAL Bank Ltd led the activity chart with 82.38 percent of the overall traded volume. Market capitalization, however, declined by 0.56 percent to settle at GHS55,256.27 million.

Stock Price Movements

In all, 6 equities altered their share prices with no advancer recorded. Ecobank Ghana Ltd was the worst performing stock, losing 70 pesewas to settle at GHS5.80 per share. Total Petroleum Ltd and Société Générale Ghana Ltd shed 5 pesewas each to trade at GHS2.80 and 70 pesewas per share respectively. Standard Chartered Bank Ltd and CAL Bank Ltd also went down by 4 pesewas each to settle at GHS18.90 and 78 pesewas per share respectively. Tullow Oil Plc also dropped a pesewa to trade at GHS11.92 per share.

Currency Market

Source: Bank of Ghana 17.04.2020

The Ghana cedi lost grounds to both the US dollar and the British pound but advanced against the Euro. The US dollar buoyed on the cautious optimism of investors after a drug trail of the COVID-19 disease provided encouraging results. The decision by the US President – Trump to reopen the US economy to address the unprecedented rise in unemployment benefits last month also supported the greenback to outmuscle the local currency. The US dollar thus appreciated by 0.08 percent to trade at GHS5.51on the interbank currency market. The year-to-date appreciation of the cedi thus dropped to 0.43 percent.

The British pound closed the trading week in the gains after UK’s government extended it coronavirus lockdown for additional three weeks to effectively fight the COVID-19 disease last Thursday. This subdued IMF growth projections for the UK economy, which is tipped to contract by 6.5 percent in 2020, about twice the projected decline for the global economy. The British pound thus advanced by 0.29 percent to trade at GHS6.89 on the interbank currency market. The year-to-date appreciation of the cedi thus dropped to 6.29 percent.

The Euro tumbled on account of multi-factors ranging from economic data to fiscal stimulus measures adopted by the bloc to fight the global pandemic. Inflation from the bloc made a sharp wrong turn from the central bank’s benchmark of 2 percent as it dropped below 1 percent to 0.7 percent due to   the COVID-19 pandemic. On account of this, Eurozone is projected to grow at negative 7.5 percent in 2020 from the 0.3 percent growth recorded in 2019. The Euro thus depreciated by 0.48 percent to trade at GHS6.00 on the interbank currency market with the year-to-date appreciation of the cedi rising to 3.61 percent.

International Markets

US stocks ended in the gains spurred by high optimism that a vaccine could be developed soon after clinic trials of COVID-19 treatment showed promising results. The strong rebound of the US capital market was also spurred by outlined plans by US government to reopen its economy after several weeks of lockdown. The S&P 500 made a week-on-week rise of 12.10 percent to settle at 2,789.82 points. The Dow Jones Industrial Average also posted a weekly gain of 12.67 percent to settle at 23,719.37 points.

The London Stock Market recorded a recovery on the growing hopes that the COVID-19 pandemic could end soon after the Remdesivir drug trial spurred rapid recovery in 113 patients within a week. The FTSE 100 thus made a weekly gain of 7.89 percent to settle at 5,842.66 points.

The Japanese Stock Exchange posted a week-on-week gain following the significant recoveries in shares of Paper & Pulp, Railway & Bus and Real Estate sparked by the global easing uncertainties attributed to the vaccine development. The Nikkei 225 thus recorded a weekly rise of 6.86 percent to settle at 19,043.40 points.

On the African equity market, the Johannesburg All Share Index advanced by 7.65 percent to settle at 48,011.56 points. The Nigerian All Share Index also upticked by 1.37 percent to settle at 21,384.03 points. The Nairobi All Share Index, however, recorded a week-on-week decline of 5.49 percent to settle at 131.07 points.

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

Brent crude oil tumbled as Saudi Arabia threatens to worsen the already oversupply of the energy commodity on the international commodities market following its plans to steep-up its production. Brent crude oil thus dropped by $10.55 to trade at $28.16 per barrel.

Gold dimmed its shine on the international commodities market on investors optimism that a new drug could likely be developed soon which raised hopes that economies could reopen and fast recover. Gold lost $2.77 to trade at $1,704.20 per ounce.

The value of Cocoa buoyed despite improved climatic conditions in top grower – Ivory Coast, which is projected to result in bumper harvest. The positive closure of the soft crop continues to be attributed to global traveling restriction which has limited the availability of the crop onto the global market. Cocoa thus added $45.00 to trade at $2,350.00 per metric tonne.

Coffee posted a decline following the blur outlook of the global demand of the soft crop and report of production challenges in Brazil and Colombia. Coffee thus went down by 3 cents to trade at $1.16 per pound.