? Ghana’s economy grew by 4.9 percent in Q1, 2020.
? Yields on short-dated treasury securities rose.
? The GSE extended its bearish run.
? Cedi advanced against the British Pound and the Euro but depreciated against US Dollar.
? Brent crude oil surged as OPEC+ enforced supply cut compliance.

Macroeconomic Update

Ghana’s economy grew by 4.9 percent in Q1, 2020.

Ghana’s GDP grew at a slower pace of 4.9 percent in the first quarter of 2020 compared to the 6.7 percent growth recorded in the first three months of 2019. GDP at constant prices was estimated at GHS 42,483.3 million but non-oil GDP at constant prices was GHS 37,301.00 million. Economic activities were significantly driven by the services sector as it accounted for 3.6 percentage points of the GDP growth; with the information & communication sub-sector leading the sector as it grew by 77.40 percent. GDP, however, slowed in the industry sector as it expanded by 1.5 percent as against the 5.4 percent in the previous quarter weighed by a 6.9 percent contraction in the Construction sub-sector.

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 11.30
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 7.40
Monetary Policy Rate (%) 20.00 17.00 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 4.90
Budget Deficit (% of GDP 5.9 3.8 4.5Sept 4.7 n/a
Public Debt (% of GDP) 69.8 57.6 63.00 n/a n/a
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 n/a

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

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Jun 22 – 26 14.01 14.06 16.85 18.75 18.85 21.70
Jun 15 – 19 13.93 14.04 16.85 18.75 18.85 21.70
Jun 08 – 12 13.95 14.06 16.88 18.75 18.85 21.70
2020Yr.Open 14.70 15.15 17.90 20.95 19.70 19.50
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rate on the Government of Ghana treasury securities recorded mixed adjustment in the week under review. The yield on the 91-Day T-Bill settled at 14.01 percent, as it upped by 8 basis points. The yield on the 182–Day T-Bill also rose by 2 basis points to close at 14.06 percent. The yield on 364– Day T-Bill however, remained unchanged at 16.85 percent. Yields on the treasury notes and bonds were also unaltered at the primary market as they were not scheduled for the week’s auction.

Results of Auction held on 19th June, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 836.00 786.10 14.0089
182-Day T-Bill 140.62 140.62 14.0551

Government accepted GHS926.72 million worth of bids out of the GHS976.62 million tendered at the auction. The amount raised outstripped the week’s target of GHS749.00 million but fell below the GHS1,193.71 million raised at the previous week’s auction. The 91-Day T-Bill dominated government’s purchase accounting for 84.83 percent of the total bids accepted. At the upcoming auction, an amount of GHS1,238.00 million is expected to be raised by the Government from the sale of the 91,182- and 364-Day T-Bills.

The normality of the yield curve as expected was sustained after the week’s auction despite the marginal adjustment recorded on the short-dated treasury securities. This is attributed to the continued downtrend in the equity market and lingering uncertainties surrounding the covid-19 pandemic which have shifted investor’s demand to the relatively safer government of Ghana treasury securities.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2016 2017 2018 2019 2020
GSE-CI -15.33 52.73 -0.29 -12.25 -14.88
GSE-FSI -19.93 49.51 -6.79 -6.23 -12.55

The Ghana Stock Exchange extended its bearish run as ill-sentiments surrounding the suspension of dividend payments by some financial and consumer staple stocks amid the covid-19 pandemic dragged the benchmark indices lower. The GSE Composite Index backtracked by 0.38 percent to settle at 1,921.29 points, representing a year-to-date loss of 14.88 percent. Similarly, the Financial Stock Index eased by 1.89 percent to close at 1,766.26 points corresponding to a year-to-date loss of 12.55 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 5.55 1.29 -76.76
Total Value Traded (GHS M) 7.35 4.21 -42.72
Market Cap (GHS M) 53,414.27 53,172.38 -0.45

Activity levels weakened compared to the previous week’s outturn. A total turnover of 1.29 million shares worth GHS4.21 million exchanged hands in the week under review as against the 5.55 million shares valued at GHS 7.35 million traded in the previous week. GCB Bank Ltd led the activity chart with 77.52 percent share of the overall traded volume. Market capitalization also dipped by 0.45 percent to close at GHS 53,172.38 million.

Stock Price Movements

A total of six equities witnessed price changes comprising three advancers and three laggards. Ecobank Ghana Ltd rose by a pesewa to close at GHS7.50 per share. MTN Ghana Ltd and Aluworks Ltd also added a pesewa each to trade at 59 pesewas per share and 11 pesewas per share respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
EGH 8.09 7.49 7.50 0.01 -7.29
MTNGH 0.70 0.58 0.59 0.01 -15.71
ALW 0.10 0.10 0.11 0.01 10.00

GCB Bank Ltd occupied the bottom of the laggard’s list as it shed 45 pesewas to close the week’s trade at GHS3.60 per share. Fan Milk Ltd and Ecobank Transnational Incorporated also dipped by 9 pesewas and a pesewa to trade at GHS2.00 per share and 6 pesewas per share, respectively.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 5.10 4.05 3.60 -0.45 -29.41
FML 4.12 2.09 2.00 -0.09 -51.46
ETI 0.08 0.07 0.06 -0.01 -25.00

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6493 5.6549 CAD 4.1605 4.1641
GBP 6.9825 6.9906 CFA 103.8087 103.8827
EUR 6.3144 6.3189 JPY 0.0528 0.0528
AUD 3.8732 3.8798 ZAR 0.3260 0.3264
NGN 63.6931 63.8701 CNY 0.7991 0.7998
Source: Bank of Ghana 19.06.2020

On the interbank forex market, the Ghana Cedi appreciated against the British Pound and the Euro but extended its losses against the US Dollar. The US dollar rose to a month high spurred by escalating geo-political tensions and upbeat retail sales data. Comments by US President-Donald Trump threatening to cut trade ties with China after trade talks resumed buoyed demand for the safe haven currency. Furthermore, retail sales for May jumped to 17.70 percent, beating the projected 8 percent rise and the revised contraction of 14.7 percent in April. On the back of these, the US Dollar appreciated by 0.04 percent to sell at GHS5.65 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 2.09 percent.

The British Pound fell to a three-month low on account of the central Bank’s quantitative easing policy and Brexit uncertainties. The Bank of England left its benchmark interest rates unchanged at 0.10 percent and upped its asset-purchasing programme by 100 billion pounds amid ballooning public debt which hit a record of 55.2 billion pounds, representing 100.9 per cent of GDP in May. The Pound was also weighed by post Brexit uncertainties as the UK-Euro talks on key issues such as cross-border law enforcement and access to the UK's fishing water remained inconclusive. The Pound thus depreciated by 1.21 percent to sell at GHS6.99 on the interbank currency market. The year-to-date appreciation of the cedi thus widened to 4.72 percent.

The Euro slipped against its major trading peers sparked by investor’s anxiety ahead of the EU summit and the resurgent US dollar. Traders eyed the ongoing EU summit as the blocs’ leaders iron out details of the proposed 750 billion euros recovery package; regarding the size of the package, proportion of grants and loans as well as the mode of dispatch. The single currency was also weighed by US Dollar’s rebound which shifted investor’s demand to the greenback. The Euro thus recorded a week-on week loss of 0.61 percent exchange at GHS6.32 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 1.67 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,041.31 3,097.74 1.86 -4.12
DJIA 25,605.54 25,871.46 1.04 -9.35
FTSE 100 6,105.18 6,292.60 3.07 -16.57
NIKKEI 225 22,305.48 22,478.79 0.78 -4.98
FTSE/JSEAllShare 53,639.64 54,224.40 1.09 -5.01
NSE All Share 25,182.67 24,826.75 -1.41 -7.51
Nairobi All Share 142.88 144.58 1.19 -13.12

Wallstreet closed higher on account of better-than-expected retail sales data which raised investor’s hope of an economic recovery from the covid-19 pandemic. Retail sales for May surged to 17.7 percent exceeding the forecasted 8 percent rise following easing of lockdown restrictions in some states which buoyed investor’s demand for risky assets. The S&P 500 thus recorded a week-on-week rise of 1.86 percent to trade at an index level of 3,097.74 points. The Dow Jones Industrial Average also advanced by 1.04 percent as it settled at 25,871.46 points.

The London Stock Exchange jumped on optimism of a breakthrough in the development of a covid-19 trial drug which improved investor’s risk-taking sentiments. The UK government, in the week under review, gave the green light for the use of trial dug-Steroid dexamethasone after studies by Oxford university revealed its effectiveness in reducing the death rate. The FTSE 100 thus posted a weekly gain of 3.07 percent to close at 6,292.60 points.

The Nikkei 225 edged up following Bank of Japan’s decision to expand the size of its lending program. The Bank of Japan upgraded the value of its loan support program from 75 trillion yen to 110 trillion yen in a bid to shore up the economy. The Nikkei 225 thus rode on these developments as it recorded a gain of 0.78 percent to settle at 22,478.79 points in the trading week.

On the African equity market, the Johannesburg All Share Index recorded a week-on-week gain of 1.09 percent to settle at 54,224.40 points. The Nairobi All Share Index also recorded a week-on-week gain of 1.19 percent to settle at 144.58 points. The Nigerian All Share Index, on the downside, slumped by 1.41 percent to 24,826.75 points.

Commodities
Wk. Open Wk. Close Change (%) YTD (%)
Crude Oil $/barrel 38.73 42.19 8.93 -36.08
Gold $/ounce 1,737.30 1,753.00 0.77 15.09
Cocoa$/metrictonne 2,395.00 2,387.00 -0.33 -6.02
Coffee $/pound 0.9518 0.9375 -1.50 -27.72
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil surged on account of the renewed commitment by OPEC + to reduce production and an uptick in global demand. The decision by OPEC and it allies to enforce compliance on cutting down production by the agreed 9.7 million barrels per day to address issues of supply glut on the market and rising global demand for fuel lifted the value of the commodity. Brent crude oil thus traded $3.46 higher at $42.19 per barrel.

Gold sustained its gains buoyed by a sudden spike in covid-19 cases which raised fears of a prolonged economic recession and trimmed investors’ demand for risky assets. Gold thus advanced by 0.77 percent to trade at $1,753.00 per ounce.

Cocoa declined following heavy rainfall recorded in major growing areas in Ivory Coast, resulting in flooding and threatening the quality of the April-September mid-crop. Cocoa thus shed $8.00 to settle at $ 2,387.00 per metric tonne.

Coffee slumped on the international commodities market driven by the depreciation of the Brazil real as the central bank cut its benchmark interest rate by 75 basis points to 2.25 percent. Coffee thus inched down by a cent to close at 94 cents per pound.

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