• February Inflation unchanged at 7.8 percent
• Interest rates on short-dated treasury securities witnessed mixed adjustment.  
• Accra Bourse failed to post gain despite dividend declarations.  
• Ghana cedi outmuscled both the British pound and Euro but depreciated versus the US dollar.
• Global equity markets tumbled on COVID-19 fears.
• Brent crude oil deepened its loss as Russia and Saudi Arabia fights for market size.

Macroeconomic update

February Inflation unchanged at 7.8 percent

Inflation was unchanged at 7.8 percent in February 2020. This followed reduced inflationary pressures at the non-food segment of the domestic economy as prices within the Electric Appliances, Cars, and Electricity saw a significant decline over the previous year’s estimate. With average inflation in these sectors dropping from 7.6 percent in February 2019 to an average rate of 6.3 percent in February 2020, Inflation at the Non-food segments dropped by 10 basis points to 7.7 percent. Food and Beverage sector inflation, however, witnessed a rise of 10 basis points to 7.9 percent spurred by relative price increment within the subsectors; Vegetables, Fruits and Nuts, and Cocoa Frinks. On the regional basis, inflation was higher in Greater Accra with a rate of 9.7 percent and followed by the Volta Region by 9.5 percent. Upper West and Ashanti regions had the lowest inflation rate of 5 percent and 5.6 percent respectively.

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 recently held auction, the yield on the 91-Day T-Bill slightly rose by a basis point to settle at 14.76 percent. Interest rates on the 364-Day T-Bill also surged by a basis point to 17.80 percent but yield on the 182-Day T-Bill went down by a basis point to 15.18 percent. Yields on the Government of Ghana treasury notes and bonds were, however, unchanged as they were not scheduled for the weeks auction.

Government accepted all the GHS889.68 million worth of bids tendered by investors at the auction. This fell below the week’s target of GHS1,000.00 million and the GHS918.81 million bids raised at the previous week’s auction. The 91-Day T-Bill continued to dominate Government’s purchase, constituting 88.30 percent of the overall bids accepted and an amount of GHS754.00 million is expected to be raised at the next auction from the sale of the 91-Day,182-Day and 364-Day T-Bills. 

The normality of the yield curve was sustained despite the rate adjustment recorded at the week’s auction. The general uptrend of the yield curve is on the back of robustness of the domestic economy and continued investor confidence in the Ghanaian economy as it continues to show signs of resilience as inflation, forex vitality and business and consumer confidence remains stable.

Ghana Stock Exchange

The Accra Bourse recorded another round of weekly decline despite dividend declaration by some financial sector as investors are yet to fully adjust to these corporate actions. CAL Bank Ltd announced a dividend of 0.089 pesewas whereas Société Générale Ghana Ltd also declared 0.09 pesewas to their respective shareholders. This adds to the recently announced 0.04 pesewas final dividend declared by the telecommunication giant – MTN. The GSE Composite Index thus saw a week-on-week drop of 0.10 percent to an index level of 2,185.81 points, representing a year-to-date loss of 3.16 percent. The GSE Financial Stock Index also recorded a weekly fall of 0.21 percent to settle at 1,961.23 points, corresponding to a year-to-date loss of 2.89 percent.

Market activities dwindled in the week under review with a total of 2.12 million shares valued at GHS1.64 million exchanged hands. This compares unfavorably to the 9.90 million shares worth GHS7.43 million which was recorded at the previous week. MTN Ghana Ltd was the most actively traded stock as it accounted for 94.75 percent of the overall traded volume. Following the bearish closure of the market, market capitalization dipped by 0.04 percent to end the week at GHS56,258.77 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, 6 equities altered their share prices with 2 appearing on the advancers list and 4 on the laggards list.  Camelot Ghana Ltd and Société Générale Ghana Ltd saw their share prices rising by a pesewa each to close the week at 10 pesewas and 73 pesewas per share respectively. 

On the bears list, GCB Bank Ltd occupied the bottom after losing 3 pesewas of its opening price to close at GHS4.79 per share. CAL Bank Ltd and Ecobank Ghana Ltd trimmed 2 pesewas each to close the week at 90 pesewas and GHS7.28 per share respectively. Enterprise Group Ltd also went down by 2 pesewas to trade at GHS1.58 per share. 

Currency Market

Source: Bank of Ghana 13.03.2020

The interbank currency market ended with the Ghana cedi posting mixed performance against the three major trading currencies. The cedi advanced against both the British pound and the Euro but depreciated versus the US dollar. The US dollar posted a strong gain as investors flew for safety amidst the global threat of the COVID-19. The greenback, which rose above 1-and-half year lows in the week under review, was boosted by upbeat inflation which rose for the second consecutive time in February 2020 by 0.2 percent and improvement in jobless claims from 215,000 to 211,000 in the week ended 6^th March, 2020. Following these developments, investors have projected  a significant cut in interest rate to avert any possible recession, amidst threat of the COVID-19 on economic activities. The US dollar thus appreciated by 0.52 percent as it traded at GHS5.33 on the interbank currency market. The year-to-date appreciation of the cedi was thus reduced to 3.86 percent.

The British pound dropped to end the week’s trading at a five-month low on the interbank currency market following measures adopted by the Bank of England in a bid to save its ailing economy, amidst the COVID-19 threat. The Bank of England slashed its interest to 0.25 percent from 0.75 percent to address the slowdown in economic activities and mitigate threats from the COVID-19 after UK’s factory activities came in much disappointing than expected. The pound thus recorded a week-on-week decline of 2.57 percent to trade at GHS6.67 on the interbank currency market. The year-to-date appreciation of the cedi stood at 9.70 percent last week.

The Euro tumbled to a week-low after the European Central Bank disappointed the market by failing to trim its interest rate in its recently held monetary policy review. Investors anticipated the central bank to cut its policy rate from the current minus 0.50 percent in a bid to boost economic activities as adopted by other economies but rather resorted to a lending program to spur borrowing and spending geared towards boosting its economic growth. The Euro thus recorded 0.17 percent loss as it reduced its selling price to GHS5.92 on the interbank currency market. The year-to-date appreciation of the cedi thus rose to 4.89 percent.

International Markets

US stock markets nosedived on investors’ fear and heavy sell-off recorded on the bourse as incidence rates associated with the COVID-19 kept soaring. Investors in the trading week were observed undertaking short selling as they borrowed shares in the hope of buying them back at a cheaper price and pocketing the difference. Shares of 3M Co (N:MMM), Facebook Inc (O:FB) and Alphabet Inc (O:GOOGL) were the most actively traded stocks on account of the sell-off. The S&P 500 thus made a weekly decline of 8.79 percent to settle at 2,711.02 points. The Dow Jones Industrial Average Index also fell by 10.36 percent to settle at 23,185.62 points.

The London Stock posted its biggest weekly decline since the 2008 great financial crisis as market slumped on fears that the UK’s government was not doing enough to control and stop the pandemic from hitting the country. On the back of this, shares within the travelling sector such as TUI, Carnival, Cook and Flybe were the most hit by the selling pressure in the week under review. The FTSE 100 thus recorded a weekly decline of 16.97 percent to settle at 5,366.11 points.

The Japanese Stock Exchange closed in the red as Japan is under pressure to adopt various fiscal and monetary policy instruments to stimulate economic activities as the county battle with the coronavirus which has cooled consumption and rattled financial markets. The Nikkei 225 thus fell by 15.99 percent to settle at 17,431.05 points.

On the African equity market, the Johannesburg All Share Index went down by 15.15 percent to settle at 44,177.63 points. The Nigerian All Share Index ended with a week-on-week drop of 13.49 percent to settle at 22,734.07 points. The Nairobi All Share Index also tumbled by 14.41 percent to close at 133.66 points.

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

Brent crude oil deepened its losses on the international commodities market as Russia and Saudi Arabia fights for market size across Europe and Asia leading to the pricing of oil as low as $25 per barrel in these regions. The price war followed the Russia’s decision not to comply with the supply cut decision by OPEC to mitigate the demand shortfall created by the novel virus. Brent crude oil thus went down by $11.42 to trade at $33.85 per barrel.

Gold trimmed value on account of forced selling pressure created by the state of emergency declaration made by the US President – Trump in the week under review in attempt to address the COVID spread in the US. Investors thus resorted to selling the safe-haven asset to raise liquidity around this period. Gold thus shed $155.70 to trade at $1,516.70 per ounce.

Cocoa dimmed its value following the declaration of 1^st episodes of the new deadly virus in top growers – Ivory Coast and Ghana. The disease which has negatively affected global economic activities is expected to affect demand of the soft crop if not well managed. Cocoa shed $220.00 to trade at $2,482.00 per metric tonne.

Coffee recovered some grounds on the international commodities market after retreating from a seven-week high in the last trading weeks. The positive closure of the soft crop in the weeks trade was sparked by renewed strength in the Brazilian real. Brent crude oil thus added 1 cent to trade at $1.07 per pound. 

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