Weekly Highlights

• Producer Price Inflation settled at 8.4 percent in October 2020
• 91-Day T-Bill rose by 6 basis points to 14.06 percent.
• Ghana Stock Exchange closed on a mixed note.
• Cedi depreciated against all the three major trading currencies.
• Brent crude oil climbed further as investors anticipates demand recovery.

Macroeconomic Update

Producer Price Inflation settled at 8.4 percent in October 2020
Producer Price Inflation dropped to its lowest in five months as it settled at 8.4 percent in October 2020. The 120-basis points moderation witnessed in October is largely attributed to the reduced input cost of production in the Manufacturing sub-sector, which constitute more than two-thirds of the overall industry sector. The producer price inflation of the manufacturing sub-sector eased from 5.9 percent in September 2020 to 5.1 percent in October, representing 80 basis points decline with the manufacture of coke, refined petroleum products, and nuclear fuel driving the rate lower with a rate of -4.6 percent. The downward drive of the overall PPI was further supported by disinflation within the Utility sub-sector with the rate dropping from 5.8 percent in September 2020 to 0.4 percent in October 2020. The PPI for the Mining & Quarrying sub-sector, however, surged to 35.3 percent in October 2020 from a previous rate of 31.8 percent. Presented below is the trend analysis of the PPI.

Key Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 10.10
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 8.40
Monetary Policy Rate (%) 20.0 17.0 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 -3.2Q2
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 7.2 7.9
Public Debt (% of GDP) 69.8 57.6 63.00 n/a 68.3
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 4.0
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
Nov 23 – 27 14.06 14.13 16.97 18.50 19.00 19.85
Nov 16 – 20 14.00 14.11 16.97 18.50 19.00 19.85
Nov 09 – 12 14.06 14.13 16.97 18.50 19.00 19.85
2020 Yr. 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.

Yields on the Government of Ghana treasury securities upped marginally with the 91-Day T-Bill, rising by 6 basis points to settle at 14.06 percent. The yield on the 182-Day T-Bill also increased by 2 basis points to settle at 14.13 percent. Interest rates on the 364-Day T-Bills and other treasury securities, however, remained unchanged as they were not part of the week’s auction.

Results of Auction held on 20th November, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 674.62 674.62 14.0645
182-Day T-Bill 99.09 99.09 14.1274

At the close of the auction, all the GHS773.71 million worth of bids tendered by investors were accepted by the Government of Ghana. This was more than the week’s target of GHS985.00 million but significantly below the GHS2.16 billion raised last week, excluding the 3-Year dollar denominated bond valued at $388.90 million. The 91-Day T-Bill was the most purchased bid as it constituted 87.19 percent of the overall bids raised. It is the expectation of Government to raise a total of GHS984.00 million at the upcoming auction.

The yield curve sustained its normality due to the marginal rate moderation observed on the treasury securities at the week’s auction. The relative robustness of the domestic economy with inflation easing at both the producer and consumer ends, coupled with recovering in consumer and business sentiments, are major contributors to the steadiness of the yield curve.

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 -19.29
GSE-FSI -19.93 49.51 -6.79 -6.23 -19.63

Trading on the Ghana Stock Exchange ended on a mixed note with the benchmark Composite Index rising marginally on account of price uplift in Fan Milk Ltd. The Index which settled at 1,821.83 points from a previous reading of 1,821.72 points, posted a week-on-week gain of 0.01 percent. This corresponded to a year-to-date loss of 19.29 percent. The GSE Financial Stocks Index, however, remained unchanged at 1623.20 points corresponding to a year-to-date loss of -19.63 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 61.30 15.14 -75.30
Total Value Traded (GHS M) 40.97 11.42 -72.12
Market Cap (GHS M) 53,118.12 53,119.28 0.00

After the week’s trade, a total of 15.14 million shares valued at GHS11.42 million, representing 75.30 percent reduction from the previous week’s outturn in terms of volume, exchanged hands. MTN Ltd was the most actively traded stocks on the bourse contributing 92.76 percent to the overall traded volume. The Market Capitalization also was unchanged at GHS53,119.28 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, Fan Milk Ltd was the lone mover. It added a pesewa to its opening price to trade at GHS1.08 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
FML 4.12 1.07 1.08 -73.79 0.93

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7101 5.7159 CAD 4.3704 4.3745
GBP 7.5865 7.5941 CFA 96.8031 96.8917
EUR 6.7700 6.7762 JPY 0.0550 0.0551
AUD 4.1748 4.1790 ZAR 0.3724 0.3727
NGN 66.8650 67.2151 CNY 0.8695 0.8702
Source: Bank of Ghana 20.11.2020

The interbank currency market ended with the Ghana cedi depreciating against all the three major trading currencies. The US dollar dimmed its shine on the international currency market as news about the effectiveness of the newly developed COVID-19 vaccine dented the appeal of the greenback as investors shifted towards riskier assets such as stocks. The dollar was further weighed by weak economic data as retail sales data rose lesser than expected and weekly jobless unexpectedly rose in the week ended 13th November 2020. Despite the dollar’s weakness it appreciated by 0.02 percent to trade at GHS5.72 on the interbank currency market. The year-to-date depreciation of the cedi thus increased to 3.14 percent.

The British pound advanced on upbeat economic data as consumer price inflation upped, giving the Bank of England a much lower risk to adopt negative lending rates in its next policy review to mitigate the impact of the pandemic on the UK economy. Consumer price inflation in the month of October 2020 rose to an annual rate of 0.77 percent, beating a forecast reading of 0.6 percent and a previous month’s reading of 0.5 percent. This and the growing hopes of a post-Brexit trade deal between London and Brussels contributed to the pound sterling’s gain in the trading week. The pound thus posted a week-on-week appreciation of 1.00 percent to trade at GHS7.59 last Friday. The year-to-date depreciation of the cedi thus rose to 3.61 percent.

The Euro drifter higher on the international currency market as the vaccine euphoria buoyed the demand for riskier currencies such as the euro in the week-under-review. The improved effectiveness of the newly developed vaccine by Pfizer Incorporated from 90 percent to 95 percent clouded the market with hopes that economic activities are likely to return to normalcy. The Euro thus recorded a weekly gain of 0.31 percent as its selling price rose to GHS6.78 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 8.31 percent.

International Market
Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,585.15 3,557.54 -0.77 -27.61
DJIA 29,479.81 29,263.48 -0.73 -216.33
FTSE 100 6,316.39 6,351.45 0.56 35.06
NIKKEI 225 25,385.87 25,527.37 0.56 141.50
FTSE/JSEAllShare 57,182.60 56,615.28 -0.99 -567.32
NSE All Share 35,037.46 34,136.82 -2.57 -900.64
Nairobi All Share 143.93 143.72 -0.15 -0.21

Wallstreet closed lower as investors worried over the tussle between the US’ house of Senate to adopt the COVID-19 stimulus relief package, as well as the ill sentiment in the lengthy rollout of vaccines in the US. This coupled with lockdowns in some states affected the Bourse in the traded week. The S&P 500 thus went down by 0.73 percent to settle at 3,557.54 points. The Dow Jones Industrial Average, similarly, went down by 0.73 percent to close at 29,263.48 points.

The London Stocks Exchange ended in the gains following upbeat sentiment surrounding the renegotiation of the Brexit between the UK Government and the European Union. The anticipation that a trade deal could be obtained to regulate the relationship between the two sides after 31st December 2020 lifted some uncertainties in the UK. The FTSE 100 thus gained 0.56 percent to settle at 6,351.45 points.

The Japanese Stocks Exchange finished the trading week in the gains as Japan’s Government plans to lift the ban on full online shareholder meetings, as COVID-19 cases eases in the region. This initiative sparked risk taking leading to 0.56 percent weekly gain of the Nikkei 225 index as it settled at 25,52.37 points.

On the African equity market, the Johannesburg All Shares Index tumbled posting a weekly loss of 0.99 percent to settle at 56,615.28 points. The Nigerian All Share Index also fell by 2.57 percent to settle at 34,136.82 points. The Nairobi All Share Index, similarly, dropped by 0.15 percent to close at 143.72 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 42.78 44.96 5.10 -31.88
Gold $/ounce 1,886.20 1,872.40 -0.73 22.93
Cocoa$/metric tonne 2,365.00 2,962.00 25.24 16.61
Coffee $/pound 1.0925 1.155 5.72 -10.95
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil closed the trading week higher on investor’s anticipation of a recovery in the demand side of the market following the positive sentiment surrounding the newly developed COVID-19 vaccine. This overshadowed report suggesting a recovery in oil production in Libya to 1.25 million bpd. Brent crude oil thus added $2.18 to trade at $44.96 per barrel.

Gold lost marginally as improved risk-taking sentiment on the global market affected its demand. The yellow metal’s fall was further affected by mixed opinions about the implementation of a fiscal stimulus package in the US meant to boost economic activities. The US Treasury Secretary – Steven Mnuchin was against its enrolment as he asked the Federal Reserve to return the funds for a general loan system. On the other hand, US Senate Republican Majority Leader – Mitch McConnell signalled renegotiation with the Democrats in parliament on a new COVID-19 stimulus package. Gold thus shed $13.80 to trade at $1,872.440 per ounce.

Cocoa surged on supply constraints from top growers – Ivory Coast and Ghana onto the global commodities market. Following the civil unrest in the Ivory Coast, supply of the beans onto the international market is limited as farmers in most growing regions in the country are unable to supply to ports. This coupled with data showing a 9.6 percent contraction in supply in Ghana resulted into the increment observed in the trading week. Cocoa thus gained $597.00 to trade at $2,962.00 per metric tonne.

Coffee jumped to a 2-month high on account of production disruptions as farmlands and infrastructure in Central America were destroyed by the Hurricane Iota. This development affected the supply of the soft crop on the commodities market, hence, leading to price lift. Coffee thus gained 6 cents to trade at $1.16 per pound.

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