• 5-year Bond oversubscribed.
• Yields on short-dated treasury securities moderated further.
• GSE Indices ended mixed, but benchmark index sustained uptrend.
• Ghana cedi outperformed all the three major trading currencies, for the second consecutive week.
• US equity market finished on a positive note, lifted by last minute recovery in telecommunication shares.
• Brent Crude Oil increased its selling price as OPEC halted initial plans to ease the production cut initiative.

Macroeconomic update

5-year Bond oversubscribed

The Government of Ghana raised a total of GHS1,770.37 million from the issuance of the 5-Year Bond, which had a target of GHS1,400.00 million per the issuance calendar of the Government of Ghana. The issued 5-Year Bond, which had an initial price guidance of 17.80 – 18.40 percent to guide the pricing pattern of both domestic and foreign investors, was a 2-Year maturity Bond that was rolled. A total of GHS1,770.37 million bids were received from investors of which Government accepted all bids, thus putting the acceptance rate at 100 percent. The bond was significantly cheaper as Government accepted it at a coupon rate of 18.30 percent, representing 155 basis points moderation from the previously issued 5-Year Bond.

Key Ghana Economic Data

Indicator 2018 2019 2020 2020 2021
Target Actual Actual
Inflation CPI (y-o-y %) 9.40 7.90 11.1 10.40 9.90
Inflation PPI (y-o-y %) 4.40 13.00 n/a 7.00 9.10
Monetary Policy Rate (%) 17.0 16.00 n/a 14.50 14.50
GDP Growth (y-o-y %) 6.3 6.5 0.9 -1.1 Q3 n/a
Budget Deficit (% of GDP 3.8 4.5Sep 7.2 7.9 n/a
Public Debt (% of GDP) 57.6 63.00 n/a 68.3 n/a
Fx. Reserves (M. Cover) 3.7 4.1 ?4.0 4.0 n/a
Source: BOG; MOFEP; GSS. * represents provisional estimate ** data yet to be released by MoF

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Mar 08 – 12 13.05 13.86 16.76 17.60 19.25 18.30
Mar 01 – 05 13.27 13.89 16.80 17.60 19.25 19.85
Feb 22 – 26 13.11 13.95 16.86 17.60 19.25 19.85
2021Yr. Open 14.09 14.12 17.00 18.50 19.25 19.85
NB: The above are the annual yields on Government of Ghana Treasury Securities.

The week’s auction witnessed another round of rate moderation on the Government of Ghana treasury securities. The yield on the 91-Day T-Bill dropped by 22 basis points to settle at 13.05 percent. That on the 182-Day and 364-Day T-Bills also recorded 3 basis points and 4 basis points moderation to settle at 13.86 percent and 16.76 percent, respectively. Interest rate on the 5-Year Bond, also saw 155 basis points moderation from an initial yield of 19.85 percent to 18.30 percent. The yields on the 2-Year and the 5-Year Notes were unchanged, as they were not part of the week’s issuance.

Results of Auction held on 26th February, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 1,153.41 1,145.02 13.0488
182-Day T-Bill 99.78 90.31 13.8633
364-Day T-Bill 95.82 95.82 16.7571
5-YR Bond 1,770.37 1,770.37 18.3000

In addition to the 5-Year Bond issuance, Government also raised a total of GHS1,331.15 million, out of the GHS1,349.01 million bids tendered by investors. This was in excess of the week’s target of GHS1,250.00 million but slightly below the previous week’s outturn of GHS1,373.54 million. This brings total bids accepted by the Government to GHS3,119.38 million, with the 5-Year Bond dominating Government’s acceptance in the week’s trade by 56.75 percent. At the upcoming trade, Government hopes to raise GHS1,100.00 million from the sale of the 91-Day, 182-Day, and 364-Day T-Bills next week.

Following the significant rate moderation on the 5-Year Bond, the yield curve witnessed downward movements at both tail ends of the curve. This was, however, unable to alter the positive upward sloping nature of the curve. We anticipate that the scheduled 2-Year and 3-Year Bonds issuance for this month, as evidenced in the issuance calendar for the 1st quarter of 2021, will result in the smoothening of the yield curve as their respective rates fall below that of the 5-Year Bond.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2017 2018 2019 2020 2021
GSE-CI 52.73 -0.29 -12.25 -13.98 13.72
GSE-FSI 49.51 -6.79 -6.23 -11.73 4.60

The Accra Bourse witnessed a mixed closure of its indices but with the Benchmark Composite Index climbing further on capital appreciations in ScancomGhana Ltd (MTN) and CAL Bank Ltd. At the closing bell, the GSE Composite Index made a week-on-week gain of 0.32 percent, as it rose to settle at an index level of 2,207.95 points. This corresponded to a positive year-to-date return of 13.72 percent. The GSE Financial Stocks Index, however, declined on accounts of price declines in Ecobank Transnational Incorporated, which nullified gains in two financial stocks as it rode on its market capitalisation size. The Index thus recorded a week-on-week decline of 0.46 percent as it settled at 1,864.75 points, reducing its year-to-date returns to 4.60 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 7.34 37.37 409.27
Total Value Traded (GHS M) 6.33 29.99 373.42
Market Cap (GHS M) 57,152.18 57,060.29 -0.16

The week’s trading realized a total of 37.37 million shares valued at GHS29.99 million. This represented over four hundred percent increment over the previous week’s outturn of 7.34 million shares worth GHS6.33 million. MTN Ghana Ltd continue to dominate the activity charts in terms of volume and value. At the week’s trade it accounted for 92.95 percent of the overall traded volume and 99.99 percent in terms of value. Market Capitalization, however, dipped by 0.16 percent to settle at GHS57,060.29 million.

Stock Price Movements

In all, four equities altered their share prices with three (3) advancers and a laggard. Leading the bulls run was CAL Bank Ltd as it appreciated by 3 pesewas to trade at 83 pesewas per share. Societe Generale Ghana Ltd and MTN Ghana Ltd followed with price surged of a pesewa each to trade at 74 pesewas and 83 pesewas per share, respectively.

Stock Price Movers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
CAL 0.69 0.80 0.83 0.03 20.29
MTNGH 0.64 0.82 0.83 0.01 29.69
SOGEGH 0.64 0.73 0.74 0.01 15.63
ETI 0.08 0.08 0.07 -0.01 -12.50

On the flipside, Ecobank Transnational Incorporated Ltd went down by a pesewa to close the trade at 7 pesewas per share.

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7233 5.7291 CAD 4.3973 4.4028
GBP 7.9102 7.9187 CFA 96.0898 96.1856
EUR 6.8197 6.8265 JPY 0.0529 0.0529
AUD 4.3973 4.4028 ZAR 0.3733 0.3737
NGN 71.2776 71.5640 CNY 0.8812 0.8819
Source: Bank of Ghana 05.02.2021

The interbank currency market witnessed another positive closure of the Ghana cedi against all the three major trading currencies. The US dollar sustained its bullish outlook following the continued support by rising yields on Government treasury securities and commitment by the US Fed to halt interest adjustment until the US economy recoveries. The yields on the US treasury securities climbed further as inflationary pressures build up as economic activities gradually return to normalcy. Yields on the US 10-Year Bond rose towards 1.5 percent, gaining almost 5.6 basis points to offer support to the US dollar. In spite of the US Dollar’s bullish outlook, the cedi rode on the supply boost initiatives by the central bank to record a weekly appreciation of 0.20 percent, as the selling price of the US dollar dropped to GHS5.73. The year-to-date appreciation of the cedi thus rose to 0.59 percent.

The British pound advanced further supported by the hawkish commentaries by Chancellor Rishi Sunak when he presented the 2021 budget statement this week. The indication of a quick rebound in economic growth by about 4 percent and a significant reduction in job losses were cited by him as some positive spill over effects, as the Government plans to hike taxes to boost its public expenditures while avoiding all sorts of “irresponsible” debt burden. This, coupled with the rapid Covid-19 vaccine rollout and the efforts at the discovery of new and effective vaccines in the UK, is anticipated to put economic growth by 7.3 percent by 2022, the highest growth rate to be seen in 7 decades. In spite of this, the British pound depreciated by 1.00 percent to sell at GHS7.92, following the supply boost initiative in the domestic which subdued pound’s gains on the international forex market. The year-to-date depreciation of the cedi thus reduced to 0.51 percent.

The Euro came under pressure following reports that economic recovery in the Eurozone will be much slower than anticipated. According to Reuter’s report, Eurozone’s inflationary pressure witnessed in February are unlikely to be sustained and to fall below the central bank’s target for years, due to the pandemic-induced recession. Renewed lockdowns in some economies in the region and the recent rapid rise in yields on Government Bonds were cited to hamper the economy, which already was in a double-dip recession. On account of this, inflation is projected to rise gradually to about 1.9 percent, a little below the bank’s target of 2 percent but will average the year at 1.4 percent and slow further to 1.2 percent in 2022. The Euro thus depreciated by 1.92 percent at a reduced selling price of GHS6.83 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 3.53 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,811.15 3,841.94 0.81 2.29
DJIA 30,932.37 31,496.30 1.82 2.91
FTSE 100 6,483.43 6,719.13 3.64 4.00
NIKKEI 225 28,966.01 28,743.25 -0.77 4.73
FTSE/JSEAllShare 66,138.05 68,271.19 3.23 14.92
NSE All Share 39,799.89 39,331.61 -1.18 -2.33
Nairobi All Share 165.39 161.67 -2.25 6.28

Wallstreet resumed its uptrend in the week under review after snapping a three week’s rally in the week ended 26th February 2021. The recovery of the market indices was spurred by last minute rebound in Telecommunication shares, due to interest rate hikes on Government treasury instruments. Microsoft shares, for instance, appreciated by 2.15 percent whereas Apple and Oracle also posted sterling performances to lift the market indices higher. The S&P 500 thus recorded a week-on-week gain of 0.81 percent to settle at 3,841.94 points. The Dow Jones Industrial Average also posted a weekly gain of 1.82 percent to settle at 31,496.30 points.

The London Stock Exchange finished the trading week higher supported by strengthening banking and energy sectors in the UK. Banks, including Standard Chartered, HSBC, NatWest and Barclays Plc, recorded price surges to support the positive closure of the Bourse. Within the energy sectors, giant oil companies including BP Global and Shell also gushed higher to support the Index. The FTSE 100 thus added 3.64 percent to settle at 6,719.13 points.

The Nikkei 225 headed southwards on account of huge selloffs in stocks within the Paper & Pulp, Railway & Bus and Real Estate. The Hitachi Zosen Corporation and the Recruit Holdings Company Ltd on the Bourse for instance fell by 7.50 percent and 6.34 percent, respectively, to negatively affect the overall performance of the market in the week’s trade. The Nikkei 225 thus slipped by 0.77 percent to settle at 28,743.25 points last Friday.

On the African equity market, the Johannesburg All Share Index thus recorded a weekly gain of 3.23 percent to settle at 68,271.19 points. The Nigerian All Share Index, however, tumbled with a week-on-week loss of 1.18 percent as it settled at 39,331.61 points. The Nairobi All Shares Index, also ended with a week-on-week decline of 2.25 percent as it settled at 161.67 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 66.13 69.36 4.88 33.90
Gold $/ounce 1,728.80 1,698.50 -1.75 -10.37
Cocoa$/metric tonne 2,701.00 2,706.00 0.19 3.96
Coffee $/pound 1.3685 1.2875 -5.92 0.39
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil finished the trading week in the gains following OPEC and its allies retreat from easing the production cut initiatives. This, coupled with threats by Saudi Arabia to unilaterally limit supply by about 1 million barrels per day in March and production disruptions of about 500,000 barrels per day in Canada, were among the factors lifting the value of the black gold. Brent crude oil thus gained $3.23 to trade at $69.36 per barrel.

Gold went down as rising yields on treasury bonds across Europe and the US dented the appeal of the safe-haven currency. The consistent rise in yields following inflationary pressures as economic activities begin to recover caused selloffs in the yellow metal for bonds. The failure of the European Bank to address the recent hikes in treasury yields also contributed to significant selloff of the yellow metal. Gold thus shed $30.30 to trade at $1,698.50 per ounce.

Coffee closed weaker after the week’s trading session following data suggesting over supply of the commodity onto the global market by Columbia – the world second largest producer. The National Federations of Coffee Growers indicated that Colombia’s export of the soft crop jumped by 18 percent year-on-year to 1.28 million bags. Coffee thus went down by 8 cents to trade at $1.29 per ounce.

Cocoa recorded a little price change on the international commodities market, as the negative impact of the resurgence dollar on the commodity was completely nullified by global projections of a demand uptick in chocolate consumptions. Cocoa thus gained $5.00 to trade at$2,706.00 per metric tonne.

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