• Producer Price Inflation for March eased to 6.8 percent.
• Yields on Government of Ghana treasury securities eased further
• GSE Benchmark Index tumbled.
• The Ghana Cedi depreciated against all the 3 major trading currencies.
• Global equity market rebounded on growing investor hopes. 
• Brent crude oil rebounded on lower-than expected inventory build-up.

Macroeconomic update

Producer Price Inflation at 6.8 percent

The producer price inflation for the month of March 2020 dropped further to settle at 6.8 percent, representing a 3.7 percentage point decline from February’s rate of 10.5 percent. The downward trend was driven by the negative impact of the COVID-19 pandemic on domestic production which has limited the importation of industrial raw and semi-raw materials into the country and further resulted in a slowdown in activities these industries. On the back of this, the three sub-sectors of Ghana’s industry posted downtrends in its PPI. The producer price inflation for the Mining and Quarrying sub-sector dropped by 2.4 percentage points to 23.7 percent in March. The PPI for the Manufacturing sector also fell by 4.7 percentage points to settle at 2.1 percent whereas the Utilities sub-sector dipped by 0.1 percentage to 12.2 percent in March. Presented below is 1-year trend analysis of the PPI:

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.

Yields on Government of Ghana treasury securities, eased further in the week under review. The yield on the 91-Day T-Bill dropped by 11 basis points to settle at 13.92 percent. That of the 182-Day T-Bill also went down by 2 basis points to settle at 14.01 percent. The yields on the 364-Day T-Bill and those on treasury notes and bonds were, however, unchanged as they were not scheduled for the week’s auction.

Government accepted all the GHS623.39 million bids tendered at the week’s auction. This surpassed the week’s target of GHS603.00 million but significantly fell below the GHS1.13 billion bids accepted at the previous auction. The 91-Day T-Bill dominated Government’s purchase, constituting 77.64 percent with the remaining being the 182-Day T-Bill. An amount of GHS991.00 million is projected to be raised at the upcoming auction through the issuance of the 91-Day, 182-Day, and 364-Day T-Bills.

Despite the recent downtrend in yields, the term structure of the Government of Ghana treasury instruments sustained its normality. This follows the general uptrend of the curve and continued investor optimism in the domestic market despite the threat of COVID-19 on the domestic economy. We expect interest rates to drop further as investors becomes more risk adverse and increase their demand for safe-haven assets such as the treasury bills.

Ghana Stock Exchange

The Accra Bourse ended in the red despite the release of some upbeat financial earnings. Impressive 1st quarter financials by MTN Ghana Ltd, Société Générale Ghana Ltd, CAL Bank Ltd and GCB Bank Ltd were unable to close the Bourse in the gains as investors reacted to the dividend suspension imposed by the central bank in a bid to mitigate effect of the COVID-19 pandemic on firms’ performance. On the back of this, the GSE Composite Index recorded a weekly loss of 2.41 percent to settle at 2,100.74 points, representing a year-to-date loss of 6.93 percent. The GSE Financial Stocks Index, however, registered a weekly gain of 0.80 percent to settle at 1,906.41 points, corresponding to 5.61 percent.

At the close of the week’s activities, market turnout surged with a total of 27.41 million shares valued at GHS19.72 million realised. This represents over 100 percent rise in terms of volume compared to the previous week’s outturn of 419,977 shares worth GHS722, 370.00.MTN Ghana Ltd led the activity chart with 99.13 percent share of the overall traded volume. Market capitalisation, however, declined by 0.97 percent to settle at GHS55,200.79 million.

Stock Price Movements

In all, a total of 8 equities altered their share prices. Ecobank Ghana led the bulls run with price appreciation of 50 pesewas to trade at GHS7.50 per share. CAL Bank Ltd a followed suit with price uptick of 5 pesewas to settle at 82 pesewas per share.

On the flip side, Standard Chartered Bank Ghana Ltd shed 77 pesewas of its opening price to settle at GHS18.00 per share, it was the worst performing stock in the week’s trade. Benso Oil Palm Plantation and MTN Ghana Ltd had their share prices declining by pesewas 20 pesewas and 5 pesewas to trade at GHS2.65 and 64 pesewas per share, respectively. Total Petroleum Ghana Ltd tumbled by 2 pesewas trade at GHS2.78. Other laggards were Access Bank Ghana PLC and Enterprise Group Ltd.

Currency Market

Source: Bank of Ghana 30.04.2020

On the interbank currency forex market, the Ghana Cedi appreciated against all the 3 major trading currencies. The US Dollar slipped to a two-week low after a dovish assessment of the US economy by the US Fed. The US Fed held its benchmark interest rates unchanged at 0-0.25 percent but hinted at quantitative easing programs to shore up the economy in the wake of the coronavirus. The greenback's loss also followed the contraction of US GDP by 4.8 percent in the first quarter of 2020, the worst since the global financial crisis of 2008 signalling a recession. Despite these, the US Dollar appreciated by 1.01 percent to sell at GHS5.60 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 1.20 percent.

The British Pound edged higher buoyed by improving risk sentiments following news of positive trial results on patients treated with covid-19 test drug remdesivir. The Pound was also boosted by a weakened dollar as US Fed left its interest rates unchanged while highlighting economic uncertainties on the likelihood of a recovery in the near- medium term. On the back of this, the British Pound traded at GHS7.06 on the interbank currency market as it appreciated by 3.71 percent. The year-to-date appreciation of the cedi narrowed to 3.65 percent.

The Euro held onto its gains against major peers supported by the weaker dollar which blurred the impact of a dovish stance by the European Central Bank.  Investors grappled with uncertainties on the economic outlook of the bloc as the European Central bank kept its pandemic emergency purchase program (PEPP) unchanged at €750 billion contrary to market’s anticipation of an increase to mitigative adverse economic impact of the novel virus. That notwithstanding, traders upped their demand for the shared currency following the greenback’s weakness. The Euro thus recorded a week-on-week gain of 2.23 percent to sell at GHS6.13 on the interbank currency market. The year-to-date appreciation of thus reduced to 1.36 percent.

International Markets

The US equity market ended in the gains spurred by bullish first quarter earnings by some listed companies. Amazon.com Inc posted a $75 billion sales in the 1^st quarter of 2020 despite the economic slowdown from the COVID-19 pandemic. Apple Inc also posted impressive gains in the 1^st quarter with profit slightly below the 1^st quarter of 2019 but had its sales growing last year’s outturn. On the back of this, investors were expectant of other similar performance by listed companies. The S&P 500 thus posted a week-on-week gain of 2.67 percent to settle at 2,912.43 points. The Dow Jones Industrial Average also upped by 2.40 percent to settle at an index level of 24,345.72 points.

The London Stock Exchange capitalised on the growing hopes surrounding the COVID-19 drug trial to end the trading week in the gains. The extent of its gains was however, trimmed after the Anglo-Dutch Shell slashed its quarterly dividend by 66 percent from 47 cents to 16 cents in a bid of mitigate the impact of the pandemic on its operations. The FTSE 100 managed to record a weekly gain of 2.59 percent to settle at 5,901.21 points.

The Japanese Stock Exchange closed on a positive note spurred by efforts of Japan’s Government geared towards halting the spread of the COVID-19. The decision to extend the state of emergency by one month amidst the global hope of a breakthrough in vaccine development contributed to the positive closure of the bourse. The Nikkei 225 thus advanced by 4.84 percent to settle at 20,193.69 points.

On the African equity market, the Johannesburg All Share Index ended with a week-on-week gain of 1.63 percent to settle at 50,336.72 points. The Nigerian All Share Index finished with a week-on-week gain of 1.87 percent to close at 23,021.01 points. The Nairobi All Share Index also upped by 2.88 percent to settle at 139.69 points.

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

Brent crude oil rebounded on lower-than-expected inventory build-up in US and optimism on re-opening of global economies. US inventories rose by 9 million barrels for the week ending April 24, lower than the forecasted 10.6 allaying some fears of a global glut of oil. Furthermore, hopes of re-opening of economies following signals of improved symptoms on patients treated with Gilead’s covid-19 trial drug lifted the value of the commodity. Brent crude oil thus rose by $4.24 to trade at $25.68 per barrel.

Gold closed in the red on account of renewed hopes of a breakthrough on the coronavirus vaccine. The yellow metal lost its safe haven appeal as upbeat news of successful trials for covid-19 treatment drug remdesivir sparked risk-taking activities. Gold thus shed $43.20to trade at $1,692.40 per ounce.

Cocoa upped its selling price on the international commodities market buoyed by concerns about the shortage of quality beans and reports of reduced favourable climatic conditions in Ivory Coast. Cocoa thus added $68.59 to trade at $2,409.50 per metric tonne.

Coffee recorded another week-on-week gain following the reduction in supply of beans from Brazil and Colombia due to poor climatic conditions. Coffee thus inched up by a cent to close at by $1.06 per pound.