• Ghana’s GDP grew at 5.7 percent for 2^nd quarter.
• Monetary Policy Rate maintained at 16 percent.
• August’s Inflation is 7.80 percent, after rebasing.
• Yield on 91-Day dropped to 14.68 percent.
• GSE ended trading week in the red.
• Ghana cedi outmuscled the Euro but lost to the dollar and pound.
• Brent crude oil advanced following supply disruption in Saudi Arabia.  

Ghana’s GDP grew at 5.7 percent for 2nd quarter.

Ghana’s economy expanded by 5.7 percent in the 2^nd quarter of 2019 as compared to the 5.4 percent growth recorded in the same period of 2018. GDP at constant prices is estimated at GHS39,952.60 million but non-oil GDP at constant prices was GHS36,839.70 million. Economic activities were significantly driven by the services sector as it recorded the highest growth rate of 6.5 percent with the Information & Communication sub-sector leading the sector as it grew by 52.8 percent. The Industry sector followed suite with a growth rate of 6.1 percent. The agricultural sector recorded a growth rate of 3.1 percent. In sectorial contribution to GDP, the services sector recorded a share of 49.1 percent, Industry sector recording a share of 35.6 percent and that of the agriculture sector at 15.3 percent.

Monetary Policy Rate maintained at 16 percent.

The Bank of Ghana has maintained its policy rate at 16 percent after a thorough review of the domestic economy and an assessment of the position of the economy in the global market. On the international front, the committee cited threat in economic activities due to the trade war tension between China and US, easing inflation due to sluggish wage growth, and uncertainties in monetary policy reforms by some advanced economies which could affect economic activities in the country. On the domestic economy, mixed data ranging from moderation in Bank of Ghana Composite Index of Economic Activity, inflationary pressures and upbeat GDP data and trade surplus data were some factors responsible for the maintenance of the policy rate.

August’s Inflation is 7.80 percent, after rebasing.

Ghana’s inflation for August is at 7.8 percent after the Ghana Statistical Service rebased the CPI from 2012 to 2018. The rebasing stemmed from government’s efforts to make the indicator much reflective of current happenings in the domestic economy while adopting international guidelines. The CPI which constituted 267 items and 42 markets has now been reviewed upwardly to 307 items and 44 markets and now has the COICOP (Classification of Individual Consumption According to Purpose) 2018 framework.

The year-to-year Inflation for Food and Non-alcoholic beverages group settled at 8.2 percent with items such as fruits and nut; cereals and cereal products; and sugar having inflation rates above the sector average. The Non-food group recorded a year-on-year inflation rise of 7.4 percent with three items namely alcoholic beverages; Transport; and household being the key drivers of inflation within the sub-sector. 

Despite the rebasing of the CPI, we foresee a rise in inflation for the month of September driven by educational needs and preparation towards the festive season. Presented below is the 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.

At the close of auction, the yield on the 91 – Day T-Bill dropped by 2 basis points to settle at 14.68 percent. The yields on the 182 – Day and 364 – Day T-Bills however, remained unchanged at 15.14 percent and 17.91 percent respectively. Interest rates on the Government of Ghana treasury notes and bonds also remained unchanged.

At the end of the auction, Government accepted all the GHS811.29 million bids tendered by investors. The week’s target of GHS843.00 million was slightly missed with the 91-Day T-Bill constituting 73.69 percent of total Government’s purchase. An amount of GHS965.00 million is scheduled to be raised at the upcoming auction through the issuance of the short-dated treasury securities.

Illustrated above is the term structure of the Government of Ghana treasury securities. Despite the rate adjustment observed after the week’s auction, the yield curve sustained its normality. We foresee the sustenance of the yield curve in subsequent auctions following the relative attractiveness of the money market which may compel Government to accept bids at reduced rate on the short-term issuance.

Ghana Stock Exchange

The Ghana Stock Exchange closed the trading week in the red weighed by significant price declines in nine laggards. The GSE Composite Index sunk further by 0.30 basis points to settle at an index level of 2,224.42 points corresponding to a year-to-date return of negative 13.52 percent. The GSE Financial Stocks Index also dropped by 0.43 basis points to settle at an index level of 1,907.37 points, representing a year-to-date loss of 11.44 percent.

Market outturn compared favorably with the previous week’s records. At the closing bell, total traded volume stood at GHS29.29 million shares valued at GHS26.14 million as compared to the GHS0.48 million worth GHS0.39 million which exchanged hands in the previous trading week. MTN Ghana Ltd dominated the activity chart with 94.97 percent of the overall traded volume. Market capitalization however, dwindled by 0.12 percent to GHS56,618.20 million.

Stock Price Movements

A total of ten equities altered their share prices at the paring the week’s opening and closing prices. This comprises of one advancer and nine laggards. GCB Bank Ltd, the lone gainer, had its share price uplifted by 20 pesewas to trade at GHS5.10 per share.

Ecobank Ghana Ltd occupied the bottom of the laggard’s list as it shed 21 pesewas to close the week’s trade at GHS7.78 per share. Total Petroleum Ltd and Unilever Ghana Ltd followed with price declines of 11 pesewas and 10 pesewas to trade at GHS2.95 and GHS16.70 per share respectively. Enterprise Group Ltd and Benso Oil Palm Plantation Ltd dropped by 5 pesewas each to end the week at GHS1.70 and GHS2.95 per share respectively. Other laggards were Fan Milk Ltd, Société Générale Ghana Ltd, Standard Chartered Bank Ltd and CAL Bank Ltd.

Currency Market

Source: Bank of Ghana 20.09.19

The Ghana cedi appreciated against the Euro but lost grounds to both the US dollar and the British pound. The US dollar rose to two weeks high on the international currency market lifted by Fed’s interest rate cut, stronger labour market conditions and improving Philly Fed index in the US economy. In the week under review, the US Fed lowered its policy interest rate by 25 basis points to the range of 1.50 – 1.75 interest rate to stimulate economic activities in the week under review. Signs of stronger labour market conditions as filing for unemployment claims fell significantly in the week ending 14^th September 2018 and the Philly Fed index which depicted positive developments in the business environs in the US buoyed market sentiment to boost the dollar. The US dollar thus appreciated by 0.19 percent to trade at GHS5.32 on the interbank currency market. The year-to-date depreciation of the cedi thus stood at 9.35 percent.

The British pound was knocked down by political uncertainties and daunting economic data from the bloc. The looming court decision to challenge the legality of Boris Johnson for suspending parliamentary seating in the bid to prevent lawmakers from making amendments to the Brexit deal could hit the pound hard in the event the move is proven to be unlawful. The Bank of England’s decision to leave interest rate unchanged at 0.75 percent while lowering growth forecast for the third quarter also contributed to the losses. Furthermore, August inflation of 1.7 percent which missed a forecast of 1.9 percent and subsequently deviated from a previous reading of 2.1 percent affected the demand for the pound in the trading week. In spite of the pound’s loss, it advanced by 0.50 percent as it traded at GHS6.65 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 7.10 percent. 

The Euro drifted further southwards against major peers on the international currency market as downbeat data from the Eurozone’s largest economy highlighted the risk of recession. Germany's producer price inflation sharply dropped to 0.3 percent in August 201/9 /fr/om a previous rate of 1.1 percent and missed a forecast of 0.6 percent mainly arising from declines in energy prices and other intermediate goods. This coupled with the recent trends of downbeat data necessitated the adoption of stimulus policies by the European Central Bank. The Euro thus shed 0.49 percent as it traded at GHS5.85 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 5.76 percent.

International Markets

The US equity market closed in the red following signs that the US-China trade war may not end soon. This followed a decision by the Chinese trade delegation to cancel a visit to farms in the US which sparked controversies on the global market. The S&P 500 dropped by 0.51 percent to settle at 2,992.03 points. The Dow Jones Industrial Average also fell by 1.05 percent to settle at 26,935.07 points.

The London Stock Exchange tumbled as the trade dispute between the US and China amidst political uncertainties in the UK affected risk taking among investors. The upcoming court ruling which seeks to determine the validity of the suspension of UK’s parliament by Boris Johnson were some development that sparked uncertainties in the UK to affect demand for stocks. The FTSE 100 thus dropped by 0.31 percent to settle at an index point of 7,344.92.

The Japanese Stock Exchange climbed further despite trade dispute between the US and China. The positive closure of index was spurred by upbeat development in the Paper & Pulp, Railway & Bus and Real Estate sub-sectors. The Nikkei 225 thus rose by 0.41 percent to settle at 22,079.09 points.

On the African equity market, the Nairobi All Share Index rose by 0.81 percent to settle at 144.98 points. The Johannesburg All Share Index, on the other hand, fell by 1.25 percent to close at 56,406.89 points. The Nigerian All Share Index also dipped by 0.29 percent to settle at 27,698.69 points.

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

Brent crude oil recorded its biggest weekly gain since January 2019 on the international commodities market following production interruption in Saudi Arabia. The attack at production sites in Saudi Arabia trimmed crude oil supply by almost half in the week under review. Brent crude oil the added $4.73 to trade at $64.95 per barrel.

Gold posted gains on the international commodities market as decision by most advanced central banks to leave interest rate unchanged vis-à-vis a policy rate cut by the US Fed created mixed sentiment which benefited the pound. Gold thus added $9.65 to trade at $1,509.15 per ounce. 

Cocoa rose further lifted by the recent price floor measure adopted by Ivory Coast and Ghana in a bid to protect livelihood of farmers. The move which is widely accepted by multinational buyers and the European Union stimulated demand of the soft crop on the international commodities market. Cocoa thus added $182.00 to trade at $2,478.00 per metric tonne.

Coffee lowered its value after the week’s trading activities dragged by the significant weakening of the Brazilian real. Coffee thus shed 4 cents to trade at 98 cents per pound.