Weekly Highlights

• Monetary Policy Rate maintained at 13.5 percent.
• Yields on GoG Treasury securities recorded mixed outturn.
• The GSE Composite Index took a nosedive as MTNGH shed value.
• The Ghana cedi depreciated marginally against the US dollar but outperformed the British pound and the Euro.
• Major international equity markets closed the week in the positive direction.
• Cocoa prices dropped sharply despite expectation that supply could tighten in the coming season.

Macroeconomic Update

Monetary Policy Rate maintained at 13.5 percent

The Monetary Policy Committee of the Bank of Ghana has maintained the monetary policy rate (MPR) at 13.5 percent underpinned by a fairly balanced risks to inflation and growth in the outlook. The recovery in global growth conditions, the tightening of global financing conditions, and rising global inflation trends—likely to have spill over effects on the Ghanaian economy, mainly through their potential impacts on trade, portfolio flows, financing, and exchange rate movements, could however not trigger the rate movement. Inflation accelerated to 9.7 percent in August, from a 9.0 percent rise in July, driven mainly by sustained food price increases but remaining within the Central bank’s target range of 8±2%, closer to the upper limit in the near-term. Latest data suggests that fiscal consolidation efforts appear to be on track, but with some inherent risks associated with wage settlements and energy sector payments, amid low revenue mobilization as debt sustainability concerns remain. This, according to the committee, warrants additional fiscal consolidation efforts, carefully balanced with sustainable growth strategies and efficient debt management strategies. The committee added that a close monitoring of the inflation situation is needed to respond swiftly to prevent potential second round effects on headline inflation.
The Monetary Policy Rate is an interest rate that monetary authorities i.e., central banks set in order to influence the evolution of the main monetary variables in the economy (e.g., consumer prices, exchange rate or credit expansion, among others)

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8± 2 9.70
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 8.10
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 3.90
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 5.1
Public Debt (% of GDP) 57.6 63.00 68.3 n/a 77.1
Fx. Reserves (M. Cover) 3.7 4.1 4.1 4.00 5.0
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
Sep 27–Oct 01 12.49 13.22 16.14 17.50 17.70 18.80
Sep 20–Sep 24 12.49 13.17 16.14 17.25 17.70 18.80
Sep 13–Sep 17 12.45 13.21 16.10 17.25 17.70 18.80
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 GoG Treasury securities at the back end of the curve registered mixed outturn at last Friday’s auction. The 91-Day bill yield remained unchanged, while the 182-Day bill rose by 5 basis point to close at 12.49 percent and 13.22 percent, respectively. The newly issued 2-Year treasury note saw the yield move by 25 basis points to close at 17.50 percent. The yields on the 364-Day bill and bonds, however, remained the same, as they were not scheduled for sale at the week’s auctions

Results of Auction held on 24th September, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 454.83 454.83 12.4925
182-Day T-Bill 696.38 696.38 13.2155
2-Year Note 926.78 916.78 17.5000

Government accepted GHS 2,067.99 million out of the GHS 2,077.99 million worth of bids tendered in by investors for the 91-Day, 182-Day, including the newly issued 2-Year Treasury Bond. The 2-Year Note took the lion share of government’s purchases and closed at a coupon rate of 17.50 percent, representing 25 basis points uptick from the previous issuance. For the upcoming auction, government plans to raise a total of GHS 972.00 million from the sale of the 91-Day, 182-Day, and 364-Day bills.

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 37.92
GSE-FSI 49.51 -6.79 -6.23 -11.73 12.52

Trading activities on the Accra bourse declined, compared to the previous week, as price movement in MTNGH sent the benchmark composite index tumbling. The GSE Composite Index shaved 118.04 points to close the week at a price of 2,677.88, dropping investors’ year-to-date gains to 37.92 percent. The GSE Financial Stock Index on the flip side inched up by 23.45 points to settle at 2,006.00, with a year-to-date gain to 12.52 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 9.78 5.07 -4.22
Total Value Traded (GHS M) 13.33 7.67 1.18
Market Cap (GHS M) 63,549.56 62,314.15 -1.94

A total of 5.07 million shares valued at GHS 7.67 million exchanged hands in trading across eighteen equities. Cal Bank PLC (CAL) was the week’s most traded stock in terms of volume as it recorded more than 58 percent of total volumes traded. The market capitalization closed the week at GHS 62,314.15 million, after losing GHS 1,235.41 million.

Stock Price Movements

On the movers’ chart, four advancers and two laggards were recorded at the closing bell. Fan Milk PLC. topped the advancers, with 82 pesewas gain to trade at GHS2.74 per share, extending investors’ year-to-date returns to 153.70 percent. Benso Palm Plantation PLC (BOPP) followed suit by 26 pesewas price appreciation to close the week at GHS2.86 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
FML 1.08 1.92 2.74 0.82 153.70
BOPP 2.00 2.60 2.86 0.26 43.00
SOGEGH 0.64 1.04 1.25 0.21 95.31
EGH 7.20 7.80 7.81 0.01 8.47

Scancom PLC (MTNGH) appeared in the laggard’s list, after losing 12 pesewas to trade at GHS1.12 per share. Republic Bank (Ghana) PLC (RBGH) also went down by 2 pesewas to trade at 43 pesewas per share.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
MTNGH 0.64 1.24 1.12 -0.12 75.00
RBGH 0.41 0.45 0.43 -0.02 4.88

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.8614 5.8672 CAD 4.6183 4.6230
GBP 8.0113 8.0205 CFA 95.4591 95.5607
EUR 6.8643 6.8716 JPY 0.0529 0.0530
AUD 4.2492 4.2541 ZAR 0.3909 0.3913
NGN 70.3886 70.4074 CNY 0.9063 0.9072
Source: Bank of Ghana 24.09.2021

The Ghana cedi posted positive weekly performance on the interbank currency market, as it firmed up against the British pound and the Euro but declined marginally versus the US dollar.

The US dollar registered a third straight week of gains at the close of last week’s trade as uncertainty over beleaguered Chinese property developer, Evergrande helped the greenback bounce back from a sharp decline in the previous trading session. China’s Evergrande Group owes $305 billion and has run short on cash, missing a Thursday deadline for paying $83.5 million and leaving investors uncertain whether it will settle the obligation before a 30-day grace period expires. However, the announcement that Evergrande would make interest payment on an onshore bond after Beijing pumped fresh cash into China’s financial system sent the safe-haven dollar to its biggest one-day percentage dip in about a month on Thursday’s trade. On the local front, the greenback registered 0.02 percent weekly decline against the local currency at a selling price of GHS 5.87 on the interbank forex market. The year-to-date depreciation of the cedi extended to 1.77 percent.
It was a volatile week for the British pound, buoyed by a mixed of policy decisions. The case for reducing the £875 billion asset facility received two additional votes in the Monetary Policy Committee (MPC) meeting on Thursday, after the members voted 8-1 to keep the main rate at 0.1 percent but noted the case for modest tightening strengthened. On inflation front, the Bank of England warned that prices could rise above 4 percent this year on the back of energy spikes and dropped its third-quarter GDP forecast to 2.1 percent from 2.9 percent. European natural gas prices have skyrocketed as shortages and restrictions have played havoc with the market. The Pound sterling recorded 0.60 percent weekly depreciation to the cedi, as it traded at a selling price of GHS 8.02 on the inter-bank forex market. The year-to-date depreciation of the cedi eased to 1.77 percent.

The Euro struggled to stay afloat, falling close to levels not seen in a month after the US Fed signaled interest rates may need to rise faster than initially expected. Earlier in the month, the European Central Bank (ECB) decided to move to “a moderately lower pace” in its €1.85 trillion Pandemic Emergency Purchase Programme (PEPP) from the €80 billion a month level it has run at since March, amid a stronger near-term outlook for prices and growth. The shared currency, however, recorded 0.60 percent weekly decline against the Ghana cedi as it traded a selling price of GHS 6.87 with the year-to-date appreciation of the cedi pointing to 2.85 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,432.99 4,455.48 0.51 18.62
DJIA 34,584.88 34,797.60 0.62 13.69
FTSE 100 6,903.91 7,051.48 2.14 9.15
NIKKEI 225 30,500.05 30,248.81 -0.82 10.22
FTSE/JSEAllShare 62,863.64 64,049.05 1.89 7.81
NSE All Share 38,943.87 38,962.28 0.05 -3.25
Nairobi All Share 182.75 177.81 -2.70 16.90
Source: www.bloomberg.com, www.investing.com & www.tradingeconomics.com

Wallstreet closed the volatile week, lifting slightly higher buoyed by gains in Tesla (SLA) and Facebook (FB) that offset a nosedive by Nike (NKE). Athletic wears company, Nike's shares fell 6.3 percent and was the biggest weigh on the Dow and the S&P 500 after it delivered a downbeat sales forecast and warned of delays during the holiday shopping season, blaming a supply chain crunch. Both the S&P 500 and the Dow Jones Industrial Average extended their values to close the week at price levels of 4,455.48 and 34,797.60, respectively.

The London bourse closed lower on Friday, in the same direction as its European peers, as Evergrande jitters made a comeback after the company remained silent on whether it will pay interest on dollar-denominated bonds. Meanwhile, HSBC, UK’s largest bank, reassured the market that the bank’s concerns about the indebted property developer and its exposure to Evergrande is limited. UK’s consumer confidence declined 5 points to -13, sharpest drop since October 2020, amid growing worries over energy bills, food costs and tax hikes. On the corporate side, AstraZeneca outperformed the market fueled by news that the pharmaceutical giant had invested in the start-up, behind Imperial College London’s experimental COVID-19 vaccine. The FTSE 100, thus, recorded a weekly gain of 2.14 percent to end the week at a price of 7,051.48.

Japan stocks closed higher on Friday, as gains in the Paper & Pulp, Railway & Bus and Real Estate sectors gave flight to the benchmark index. News of improving covid-19 situation with the health ministry saying emergency conditions could be lifted at the end of this month also boosted investors’ confidence. Data release showed Japan’s consumer prices fell for the 11th straight month in August, while core consumer prices remained unchanged, ending a drop for the first time in 13 months. Also, PMI data for September showed factory growth in Japan was at an 8-month low, while the contraction in services activity eased. On a week-on-week basis, the NIKKEI 225 recorded 251.24 points decline to close the week at a price of 30,248.81.

On the African market, the Johannesburg All Share and Nigerian All Share recorded gains to close the week at 64,049.05 and 38,962.28 price levels, respectively. The Nairobi All Share index on the other hand shed 2.70 percent week-on-week to close the week at a price of 177.81.

International Commodities Market

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 75.34 78.09 3.65 50.75
Gold $/ounce 1,751.40 1,751.70 0.02 -7.57
Cocoa$/metric tonne 2,665.00 2,591.00 -2.78 -0.46
Coffee $/pound 1.873 1.9435 3.76 51.54
Source:www.bloomberg.com, www.investing.com & www.tradingeconomics.com

Crude oil prices rose for a third straight week to a near three-year high on Friday as decline in global output forced energy companies to fall back on reserves following Hurricane Ida and other storms in the US that damaged facilities on the Gulf coast. Data from EIA showed US oil reserves fell by 3.5 million barrels to 414 million last week, the lowest since October 2018 as supply continue to point south, with some members of OPEC+ and their allies, struggling to raise output due to under-investment or maintenance delays during the pandemic. Brent crude oil thus recoded a weekly gain of $2.75 to close at $78.09 per barrel on the international commodity market.

Gold closed the week pointing to its lowest level since August 11th and booking its third straight weekly decline underpinned by a series of hawkish signals from major central banks. The Federal Reserve confirmed tapering could begin as soon as November and interest rate hikes could follow earlier than expected. The yellow metal has been recently battling against a stronger dollar that stemmed from surging US Treasury bond yields. On weekly basis, gold added $2.75 to settle at $78.09 per ounce, at the close of trade on Friday.

Cocoa trimmed its value on the international commodity market despite expectations that supplies could tighten in the upcoming 2021/22 season, underpinned by a dip in Ghana's production output, the second-largest producer of the cash crop. Cocoa thus registered a sharp weekly declined as it shaved $74.00 to trade at $2,591.00 per ounce.

Coffee recorded gains at the close of trade of Friday amid concerns about lower production in Brazil due to drought and frosts. Brazil's coffee crop is expected to drop 25.7% this year compared with the record 2020 season when 63 million bags were produced. Meanwhile, global coffee consumption is expected to exceed production this year for the first time since 2017, according to the USDA. Coffee thus inched up marginally on a weekly by 7 cents to trade at $1.94 per pound.

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