Weekly Highlights

Producer Price Inflation hit 11.8 percent in May 2021
364-Day T-Bill dropped slightly to 16.34 percent.
GSE trimmed its year-to-date returns.
Ghana cedi lost grounds against three major trading currencies.
Wall Street traded positively, as investors view inflationary pressures temporarily.
Brent crude oil surged on demand outlook.

Macroeconomic Update

Producer Price Inflation hit 11.8 percent in May 2021

The Producer Price Inflation (PPI) for May came in at 11.8 percent (year-on-year), up from the revised previous month’s rate of 10.9 percent. The 0.9 percent hike in producer price inflation steam from higher input cost registered within the Manufacturing and Mining & Quarrying sub-sectors of the economy. The PPI for the Manufacturing sub-sector, jumped by 1.2 percentage point to 14.6 percent in May, whereas that of the Mining & Quarrying sub-sector saw 0.8 percentage point increment over April’s rate of 11.9 percent to settle at 12.7 percent. The PPI for the Utility sub-sector, however, recorded no inflation over the last year’s reading of 12.2 percent. Illustrated below is the trend of the PPI between May 2020 and May 2021.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8.00 8.50
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 11.80
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 13.50
GDP Growth (y-o-y %) 6.3 6.5 0.4 5.00 3.1
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 2.6 Q1
Public Debt (% of GDP) 57.6 63.00 68.3 n/a n/a
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 n/a
Source: BOG; MOFEP; GSS.

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Jun 28 – Jul02 12.63 13.38 16.33 17.60 17.70 18.30
Jun 21 – 25 12.63 13.39 16.34 17.60 17.70 18.30
Jun 14 – 18 12.64 13.42 16.34 17.60 17.70 18.30
2021 Yr. 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.

Yields on the Government of Ghana Treasury securities moderated further with the 182-day security dropping by a basis point to settle at 12.63 percent. Interest rate on the 364-Day T-Bill also went down by a basis point to 16.33 percent, but that on 91-Day T-Bill was unchanged at 12.63 percent. Yields on the GoG Bonds and Treasury Notes were, however, unchanged as they were not scheduled for the week’s auction.

Results of Auction held on 25th June, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 739.60 576.99 12.6246
182-Day T-Bill 184.42 184.42 13.3796
364-Day T-Bill 601.15 535.52 16.3330

A total of GHS1,296.93 million worth of bids were raised by the Government at the week’s auction. This outstripped the week’s target of GHS1,216.00 million, with 91-Day T-Bill dominating Government’s purchase. At the upcoming auction, an amount of GHS1,178.00 million is targeted to be raised from the sale of the 91-Day and 182-Day T-Bills.

The yield curve sustained its normality but further declined in rates at the short-dated ends. The rate moderation is tipped to continue further due to policy intent of the central bank aimed at reducing the frequency of interest payment, whiles making returns on long-dated investment much attractive. This development is projected to aid the private sector’s penetration in economic growth, as it seeks to results in cheaper cost of capital.

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 36.16
GSE-FSI 49.51 -6.79 -6.23 -11.73 4.97

The Accra Bourse further trimmed its year-to-date performance, following profit taking activities witnessed in some blue-chip stocks. At the end of the week’s trading, the GSE Composite Index saw a week-on-week decline of 0.09 percent, as it settled at 2,643.60 points, corresponding to a year-to-date return of 36.16 percent. The GSE Financial Stock Index also posted a weekly loss of 0.61 percent, as it lowered its index level to 1,871.41 points, reflecting a year-to-date return of 4.97 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 7.73 3.96 -48.76
Total Value Traded (GHS M) 9.27 5.18 -44.04
Market Cap (GHS M) 61,520.05 61,330.73 -0.31

Market activities were much slower, compared to what was recorded in the previous week. A total of 3.96 million shares valued at GHS5.18 million exchanged hands on the bourse, during the week’s trading. This represents a slight decline compared to the 7.73 million shares worth GHS9.27 million that exchanged hands at the previous week’s trading. Cal Bank Ltd dominated the activity chart, as it contributed 41.75 percent of the overall traded volume. Market capitalization thus went down by 0.31 percent to close at GHS61,330.73 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, a total of 6 stocks appeared on the mover’s list: 4 advancers and 2 laggards. Unilever Ghana Ltd was the best performer, it gained 26 pesewas to finish the week’s trade at GHS3.33 per share. Total Petroleum Ltd followed suit, with price uplift of 23 pesewas to settle at GHS3.65 per share. Enterprise Group Ltd and Société Générale Group Ltd also saw 5 pesewas and a pesewa rise, to trade at GHS1.80 and 90 pesewas per share, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
UNIL 8.29 3.07 3.33 0.26 -59.83
TOTAL 2.83 3.42 3.65 0.23 28.98
EGL 1.4 1.75 1.80 0.05 28.57
SOGEGH 0.64 0.89 0.90 0.01 40.63

On the downside, CAL Bank Ltd and Ecobank Transnational Incorporated both dropped by a pesewa each to trade at 70 pesewas and 5 pesewas per share, respectively.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
CAL 0.69 0.71 0.70 -0.01 1.45
ETI 0.08 0.06 0.05 -0.01 -37.50

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.7513 5.7571 CAD 4.6789 4.6836
GBP 7.9995 8.0081 CFA 95.3856 95.4800
EUR 6.8701 6.8769 JPY 0.0519 0.0520
AUD 4.3709 4.3756 ZAR 0.4023 0.4027
NGN 71.1758 71.3183 CNY 0.8909 0.8913
Source: Bank of Ghana 25.05.2021

Trading on the interbank currency market ended with the Ghana cedi depreciating against all the three major trading currencies. The US dollar stood bullish on the international forex market, following investors’ anticipation that duration to halt interest rate hike may be shorter-than-expected, due to the fast pace of economic recovery from the COVID-19 pandemic. The expansion of the labour market, coupled with the consistent rise in consumer price inflation, has increased investors’ bet for interest rate hike, sooner than the 2023 projections by the US Fed. The US dollar thus advanced by 0.05 percent against the local currency. selling at GHS5.76 on the interbank currency market. The year-to-date appreciation of the cedi thus dropped to 0.10 percent.

The British pound ended positive on the international currency market, on account of economic recovery signs in the UK. This is evident in inflation outstripping the bank’s target of 2 percent in May, and the expansionary activities within the industry and services sector, leading to shrinking in unemployment rate in April 2021 by 0.3 percent to 4.7 percent. On the back of this, Government borrowing saw a reduction of £19.4bn to £24.3bn between May 2020 and May 2021 on account of increased revenue. The British pound thus staged a week-on-week appreciation of 0.73 percent to the local currency, as its selling price jumped to GHS8.00 on the interbank currency market. The year-to-date depreciation of the cedi thus settled at 1.62 percent.

The Euro finished the week’s trade much stronger, as investors demanded more of the shared currency during the week’s trade. Eurozone business growth recorded its fastest growth in 15 years in June, on the back of the easing restrictions, which saw most businesses producing at maximum capacity. Data on Eurozone bonds had yields drifting much higher, following the prospect of economic growth. The yield on the 10-year Government bond gained about 12 basis points. The Euro appreciated by 0.72 percent, selling at GHS6.88 on the interbank currency market. The year-to-date appreciation of the cedi thus narrowed to 2.77 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,166.45 4,280.70 2.74 13.97
DJIA 33,290.08 34,433.84 3.44 12.51
FTSE 100 7,017.47 7,136.07 1.69 10.46
NIKKEI 225 28,964.08 29,066.18 0.35 5.91
FTSE/JSEAllShare 65,635.23 66,215.47 0.88 11.46
NSE All Share 38,641.33 37,653.12 -2.56 -6.50
Nairobi All Share 172.38 171.62 -0.44 12.83

Wallstreet finished the week’s trade bullish, as investors increased their bet that recent inflationary pressures in the world’s largest economy – US was temporary than projected. This speculation casted doubt about growing concerns of an earlier-than-expected interest rate cut by the Fed. The S&P 500 thus posted a week-on-week gain of 2.74 percent to settle at 4,280.70 points. The Dow Jones Industrial Average also went down by 3.44 percent to close at 34,433.84 points.

The London Stock Exchange was supported by energy and mining sector stocks, which surged on account of the decision by the Bank of England to leave its interest rates unchanged. This, coupled with bullish economic readings from the UK’s economy, buoyed demand for UK stocks. The London Stock Exchange thus saw a week-on-week gain of 1.69 percent to close at 7,136.07 points.

The Japanese Stock Exchange buoyed further on account of rising demand for stocks within the Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus registered a weekly gain of 0.35 percent to settle at an index level of 29,066.18 points.

On the African equity market, the Johannesburg All Share Index saw a rebound of 0.88 percent to settle at 66,215.47 points. The Nigerian All Share Index, however, went down by 2.56 percent to settle at 37,653.12 points. The Nairobi All Share Index, also dipped by 0.44 percent to settle at 171.62 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 73.51 76.18 3.63 47.07
Gold $/ounce 1,769.00 1,777.80 0.50 -6.19
Cocoa$/metric tonne 2,302.00 2,351.00 2.13 -9.68
Coffee $/pound 1.499 1.5725 4.90 22.61
Source:www.bloomberg.com, & www.investing.com

Brent crude oil traded higher on the international commodities market, following signs of demand expansion, resulting from the reopening of economies. On the back of this, demand for the energy commodity is projected to outstrip supply, as OPEC and its allies plans on controlling the availability of the commodity on the global market. Brent crude oil thus added $2.67 to trade at $76.18 per barrel.

Gold upped its value on the international commodities market. The recently released jobless data from the US economy sparked uncertainties about the pace of recovery in US labour market. Jobless claims for the week ended 19th June 2021 diverged from a target of 380,000 after settling at 411,000 to disappoint investors. Demand for Gold thus rose to put its weekly gain at $8.80, to settle at $1,777.80 per ounce.

Cocoa recorded a week-on-week gain, despite abundant supply concerns in Ivory Coast after official data from Ivory Coast suggested export activities rising by 8.1 percent between 1st October 2020 to 20th June 2021. Cocoa thus added $49.00 to trade at $2,351.00 per metric tonne.

Coffee jumped to its highest in two weeks at the end of the week’s trading. This followed supply challenges in top grower – Vietnam. The lack of limited shipping containers in Asia caused a 12 percent cut in export of the soft crop from Vietnam to 715,263 metric tonnes supplied onto the global market. Coffee thus added 7 cents to trade at $1.57 per pound.

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