Weekly Highlights

• Inflation dropped to 9.8 percent in November
• Yields on short-dated treasury securities witnessed mixed adjustment.
• Accra Bourse steeped up recovery to reduce year-to-date losses.
• Ghana cedi outmuscled the British pound and Euro.
• US equity market hit by stimulus talk deadlock.
• Brent crude oil nearly hit the $50.00 mark, as demand picks-up.

Macroeconomic Update
Inflation dropped to 9.8 percent in November
Consumer price inflation settled at 9.8 percent in November 2020. This represents a fourth consecutive decline and the lowest since April 2020. The 0.30 percent moderation spurred by reduced inflationary pressures within the food and non-alcoholic beverage sector, brought the rate into the inflation bound of 8±2 percent target, set by the Government. Food and non-alcoholic sector Inflation settled at 11.7 percent in November 2020 from a previous rate of 12.60 percent. Non-Food inflation was, however, unchanged at 8.30 percent for November 2020. Presented below is the trend analysis of the CPI.

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
Dec 14 – 18 14.08 14.11 16.99 18.50 19.25 19.85
Dec 07 – 11 14.07 14.13 16.97 18.50 19.25 19.85
Nov 30 – Dec04 14.07 14.14 16.97 18.50 19.25 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.

At the close of Friday’s auction, the 91-Day T-Bill rose by a basis point to settle at 14.08 percent. The 364-Day T-Bill also upped by 2 basis points to settle at 16.99 percent. The 182-Day T-Bill, however, dipped by 2 basis points to settle at 14.11 percent. Interest rates on the Government of Ghana treasury securities were, however, unchanged as they were not part of the week’s auction.

Results of Auction held on 11th November, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 880.29 880.29 14.0774
182-Day T-Bill 123.87 123.87 14.1129
364-Day T-Bill 62.38 62.38 16.9883

Government accepted all the GHS1.07 billion bids tendered by investors. The amount raised was more than the week’s target of GHS925.00 million but below the GHS1.18 billion raised at the previous auction. The 91-Day T-Bill dominated Government purchase, constituting 82.54 percent of the overall bids raised at the week’s auction. It is the expectation of Government to raise a total of GHS1,799.00 million at the upcoming auction from the issuance of the 91-Day, 182-Day, and 364-Day T-Bills at the upcoming auction.

Following the marginal rate adjustments recorded on treasury instruments at the week’s auction, the yield curve sustained its upward sloping nature. This signal sustained investor confidence in the domestic economy as long dated investments relatively attracts higher compensation over short-dated ones.

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 -17.85
GSE-FSI -19.93 49.51 -6.79 -6.23 -16.91

The Accra Bourse steeped up its recovery, posting another positive week-on-week gain in the last month of the year as investors buoyed their demand for some blue-chip stocks. At the closing bell, the GSE Composite Index thus upped by 1.87 percent to settle at 1,854.32 points, corresponding to a year-to-date loss of 17.85 percent. The GSE Financial Stocks Index, similarly, posted a weekly gain of 3.24 percent as it settled at 1,678.22 points, reflecting a year-to-date loss of 16.91 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 37.59 25.51 -32.13
Total Value Traded (GHS M) 23.21 60.50 160.61
Market Cap (GHS M) 53,102.36 53,461.32 0.68

At the close of the week’s trade, total traded stocks stood at 25.51 million valued at GHS60.50 million. This was below the 37.59 million shares worth GHS23.21 million recorded at the previous week’s auction. Guinness Ghana Brewery Ltd (GGBL) and MTN Ghana Ltd were the most actively traded stocks in the week’s trade. GGBL accounted for 19.11 percent share of the overall traded volume whereas MTN Ghana Ltd accrued 60.59 percent. Market capitalization surged further in the week’s trade by 0.68 percent to GHS53,461.32 million, following the positive closure of the market.

Stock Price Movements

In all, only two equities changed prices with no laggard recorded. Ecobank Ghana Ltd gained 94 pesewas to trade at GHS5.99 per share. Total Petroleum Ltd also had its share prices rising by 48 pesewas to trade at GHS2.83 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
EGH 8.09 5.05 5.99 0.94 -25.96
TOTAL 3.00 2.35 2.83 0.48 -5.67

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7116 5.7174 CAD 4.4746 4.4789
GBP 7.5491 7.5578 CFA 94.7340 94.8340
EUR 6.9169 6.9242 JPY 0.0550 0.0550
AUD 4.3030 4.3087 ZAR 0.3772 0.3777
NGN 67.0225 67.3725 CNY 0.8712 0.8720
Source: Bank of Ghana 11.12.2020

The interbank currency market closed the week’s trade with renewed strength for the local currency as it outmuscled both the British pound and the Euro but depreciated versus the US dollar. The US dollar on the international currency snapped a three-week low performance last Friday on renewed investor hopes for a global economic rebound and a fading pandemic in 2021. This comes on the back of effectiveness of the COVID vaccine, which is tipped to put the world’s largest economy on the path of normalcy next year. The US dollar, thus, riding on this appreciated by 0.01 percent against the cedi to up its selling price to GHS5.72 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 3.16 percent.

The British pound lost grounds following the difficulty in the UK Government in securing a trade deal with the European Union in the ongoing Brexit negotiation. The growing signs of impossibility despite the assurance by Boris Johnson – UK’s Prime Minister – to investors, increased their bet for a no-deal Brexit by the end of the 31st December deadline. The pound sterling was further affected by the Bank of England’s dovish sentiment about the outlook of the UK economy as it plans to push borrowing rates which is currently at a record low of 0.10%, below zero to mitigate a messy exit. The British pound thus depreciated by 2.01 percent following the reduction of its selling price to GHS7.56 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 3.14 percent.

The Euro was little changed at the end of the week’s trade on the international currency market. The single currency was on the defensive in the early trading session of the week following daunting projections of a double-dip recession of the Eurozone on account of the harsh impact of the pandemic. This was, however, short-lived after the European Central Bank rolled out yet more stimulus measures to revamp economic activities within the bloc. The decision to keep its main interest rate i.e., refinancing operations, lending facility and the deposit facility at 0.00 percent, 0.25 percent, and -0.50 percent respectively, until inflation outlook improved to the bank’s target of 2 percent, was also made. Plans to increase the envelope of the pandemic emergency purchase programme (PEPP) by €500 billion to a total of €1,850 billion trimmed the extent of depreciation of the euro on the international forex market. The Euro thus depreciated by 0.46 percent to trade at GHS6.92 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 6.92 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,691.96 3,663.46 -0.77 13.39
DJIA 30,069.79 30,046.37 -0.08 5.28
FTSE 100 6,555.39 6,546.75 -0.13 -13.20
NIKKEI 225 26,547.44 26,652.52 0.40 12.66
FTSE/JSEAllShare 59,527.70 59,412.61 -0.19 4.08
NSE All Share 35,064.36 34,250.74 -2.32 27.60
Nairobi All Share 146.75 147.12 0.25 -11.59

The US equity market snapped a three week win as investors mulled over the prospect of a stimulus deal. All efforts to break the deadlock in the stimulus talk before year-end suffered a strong resistance after McConnell – Majority leader in US Senate indicated his side’s unwillingness to back some parts of the deal. This development affected risk taking leading to the fall in indices on the Wallstreet. The S&P 500 thus fell by 0.77 percent to settle at 3,663.46 points. The Dow Jones Industrial Average also dipped by 0.08 percent to settle at 30,046.37 points.

The London Stocks Exchange closed in the red spurred by rising investor bet for no trade deal between the UK Government and the European. The speculation that the UK Government was unwell to accept the proposed trade terms of the bloc weighed on market activities in the traded week. The FTSE 100 thus fell by 0.13 percent to settle at 6,546.75 points.

The Japanese Stocks Exchange ended on a positive note lifted by the upbeat investor sentiment surrounding the effectiveness of the COVID-19 vaccines. On the back of this, shares within the Paper & Pulp, Railway & Bus and Real Estate sectors were the most demand stocks on the bourse. The Nikkei 225 thus recorded a week-on-week gain of 0.40 percent as it rose to settle at 26,652.52 points.

On the African equity market, the Johannesburg All Shares Index posted a week-on-week loss of 0.19 percent, as it settled at 59,412.61 points. The Nigerian All Share Index also recorded a week-on-week loss of 2.53 percent to settle at 34,250.74 points. The Nairobi All Share Index, however, rebounded by 0.25 percent to close at 147.12 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 49.25 49.97 1.46 -24.29
Gold $/ounce 1,840.00 1,843.60 0.20 21.04
Cocoa$/metric tonne 2,878.00 2,747.00 -4.55 8.15
Coffee $/pound 1.1535 1.191 3.25 -8.17
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil nearly touched the $50.00 benchmark on the international commodities market as demand for the energy commodity surged on account of gradual uptick in economic activities. Hopes that the COVID-19 vaccine could revive global economy, coupled with OPEC’s decision to delay bringing back much of the extra 2 million barrel per day planned for January, are driving gains for the commodity. Brent crude oil thus gained 72 cents to trade at $49.97 per barrel.

Gold ended a rollercoaster week higher, eking out a weekly gain, as talks in the U.S. Congress for a COVID-19 fiscal stimulus package hung in the balance. This nullified previous day’s losses steamed from investors’ drift from safety as positive sentiment about plans by the US Government to authorise the emergence use of the COVID-19 vaccine. Gold thus advanced by $3.60 to trade at $1,843.60 per ounce.

Cocoa recorded losses after the week’s trade as international commodities market continue to be flooded with supply of the beans from Ivory Coast due to improved climatic conditions. In contrast, the demand side of the market appears dwindling falling for the first time since 2016 largely due to the pandemic. Cocoa thus shed $131.00 to close at $2,747.00 per metric tonne.

Coffee finished on a positive note, lifted by the resurgence of the Brazilian real and dwindling excess supply on the international commodities market. The 2.58 percent appreciation of the Brazilian real and data by the International Coffee Organisation (ICO) showing 5.1 percent cut in surplus estimate for the 2019/2020 crop season supported the soft crop. Coffee thus gained 4 cents to trade at $1.19 per pound.

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