Weekly Highlights

? May’s inflation rose to 11.3 percent
? Yields on GOG treasury securities eased.
? The GSE closed in the red.
? Global equity markets tumbled on fears of a second wave of covid-19 infections.
? Cedi appreciated against the British Pound but lost to the US Dollar and the Euro.
? Brent crude tumbled but Gold rose on safe haven sentiments.

Macroeconomic Update

May’s inflation rose to 11.3 percent

May’s inflation stayed in the double digits; climbing further by 70 basis points from April’s rate of 10.6 percent to 11.3 percent. This represents 130 basis points divergence from the upper bound of the medium-term inflation target of 10 percent and the second consecutive monthly rise. COVID-19 stimulated demand from both the food and non-food segments of the economy were the contributors to the inflation rise, with the former dominating with 58.6 percent. Inflation at the Food and Non-Alcoholic Beverages sector rose by 70 basis points in the month of May to 15.10 percent from the April’s figure of 14.4 percent; with sub-sectors vegetables (34.9%) and fruits and nuts (21.5%) posting the highest inflations. Non-food inflation which settled at 8.40 percent in May also saw a 70 basis points rise following inflationary pressures within the Housing, Water, Electricity and Gas sub-sectors. At the regional level, inflation was least recorded in the Upper East Region but highest in the Greater Accra (13.3%), Ashanti (12.8%) and Western (12.1%) regions. Presented below is a 1-year trend analysis of the CPI:

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 10.6
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 7.40
Monetary Policy Rate (%) 20.00 17.00 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 n/a
Budget Deficit (% of GDP 5.9 3.8 4.5Sept 4.7 n/a
Public Debt (% of GDP) 69.8 57.6 63.00 n/a n/a
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 n/a
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
Jun 15 – 19 13.93 14.04 16.85 18.75 18.85 21.70
Jun 08 – 12 13.95 14.06 16.88 18.75 18.85 21.70
Jun 01 – 05 14.02 14.07 16.88 18.75 18.85 21.70
2020Yr.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.

The yields on Government of Ghana treasury securities moderated once again at this week’s auction. The yield on the 91-Day T-Bill settled at 13.93 percent, as it dipped by 2 basis points. That on the 182-Day and 364-Day T-Bills also eased by 2 basis points and 3 basis points to settle at 14.04 percent and 16.85 percent, respectively. Yields on the treasury notes and bonds were however unchanged as they were not scheduled for the week’s auction.
Results of Auction held on 12th June, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 784.24 784.24 13.9295
182-Day T-Bill 113.99 113.99 14.0360
364-Day T-Bill 295.48 295.48 16.8451

The week’s auction closed with Government accepting all the GHS1,193.71 million worth of bids tendered by investors. This exceeded the week’s target of GHS1,182.00 million and the GHS925.23 million raised at the previous week’s auction. The most accepted bids at the auction was the 91-Day T-Bill, constituting 65.70 percent of the total bids raised. An amount of GHS749.00 million has been set as the target for the upcoming auction through the issuance of the 91-Day and 182-Day T-bills.

Illustrated above is the term structure of the Government of Ghana treasury securities. As largely expected, the yield curve sustained its normality following the general positive sentiment investors have in the primary market and the economy at large. The GHS17.8 billion target hoped to be raised by the Government at the primary market for the second quarter is largely expected to be achieved as the money market continues to dominate investors’ choice following the uncertainties in other markets of the economy.

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 -14.55
GSE-FSI -19.93 49.51 -6.79 -6.23 -10.86

The Ghana Stock Exchange headed southwards following massive sell-off on the bourse as uncertainties surrounding the covid-19 pandemic weighed on investor’s risk appetite. At the close of trading session, the GSE Composite Index eased by 1.63 percent to settle at an index level of 1,928.66 points, representing a year-to-date loss of 14.55 percent. The GSE Financial Stocks Index, also declined by 1.99 percent to settle at 1,800.26 points, corresponding to a year-to-date loss of 10.86 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 17.57 5.55 -68.41
Total Value Traded (GHS M) 11.73 7.35 -37.34
Market Cap (GHS M) 53,745.96 53,414.27 -0.62

Market outturns waned as compared to the previous week’s trading session. A total turnover of 5.55 million shares valued at GHS7.35 million exchanged hands representing 68.41 percent decline over the 17.57 million shares worth GHS11.73 million traded last week. Liquidity was mainly driven by MTN Ghana Ltd as it accounted for 59.64 percent of the overall traded volume. Market capitalization also dipped by 0.62 percent to settle at GHS53,414.27 million.

Stock Price Movements

At the pairing of the day’s opening and closing prices, no advancer was recorded. GCB Bank Ltd, however, trimmed 43 pesewas of its opening price to close at GHS4.05 per share. Fan Milk Ltd and Guinness Ghana Breweries Ltd dipped by 36 pesewas and 20 pesewas to trade at GHS2.09 per share and GHS1.20 per share respectively. Republic Bank (Ghana) Ltd and Enterprise Group Ltd also shed 9 pesewas and 5 pesewas to settle at 40 pesewas per share and GHS1.44 per share, respectively. Other laggards were Ghana Oil Company Ltd, Total Petroleum Ghana Ltd and Cal Bank Ltd.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 5.10 4.48 4.05 -0.43 -20.59
FML 4.12 2.45 2.09 -0.36 -49.27
GGBL 1.69 1.40 1.20 -0.20 -28.99
RBGH 0.56 0.49 0.40 -0.09 -28.57
EGL 1.65 1.49 1.44 -0.05 -12.73
GOIL 1.70 1.55 1.50 -0.05 -11.76
TOTAL 3.00 2.40 2.37 -0.03 -21.00
CAL 0.89 0.70 0.69 -0.01 -22.47

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6472 5.6528 CAD 4.1529 4.1572
GBP 7.0657 7.0751 CFA 103.1817 103.2710
EUR 6.3518 6.3573 JPY 0.0526 0.0526
AUD 3.8628 3.8729 ZAR 0.3303 0.3307
NGN 63.7168 63.8938 CNY 0.7963 0.7972
Source: Bank of Ghana 12.06.2020

On the interbank currency market, the Ghana Cedi appreciated against the British Pound but lost grounds to the US Dollar and the Euro. The US dollar hit a 3-month low following a dovish assessment of the US economy by the US Federal Reserve. In the week under review, the US Fed pledged to maintain its current asset buying program and keep the benchmark interest rates near zero until 2022. The US Fed also projected a grim outlook for the economy, with unemployment expected to hit 9.3 percent by the end of this year and gross domestic product (GDP) projected to slump to 6.5 percent in 2020. In spite of the greenback’s outturn, it appreciated by 0.48 percent to sell at GHS5.65 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 2.06 percent.

The British Pound tumbled against its major trading peers as Brexit uncertainties and downbeat GDP data halted the Pound’s rally. UK’s economy shrank by 20.4 percent in April; far worse than the 5.8 percent fall posted in March following restrictions imposed on businesses to control the spread of covid-19. The Pound Sterling was also weighed by lingering uncertainties surrounding UK’s future trading relationship with the European Union ahead of next week’s crunch Brexit meeting to discuss the likelihood of an extension of the transition period beyond December 2020. The Pound succumbed to these developments as it depreciated by 0.99 percent to exchange at GHS7.08 on the interbank currency market. The year-to-date appreciation of the cedi thus increased to 3.47 percent.

The Euro sustained its upward trajectory buoyed by the dollar’s weakness and improved investor’s confidence on the outlook of the bloc. The single currency’s rally was spurred by rising hopes of an economic recovery of the Eurozone following easing of restrictions by some member states in the bloc and the recent stimulus package rolled out by the European Central Bank to mitigate impacts of the pandemic on member countries. The Euro was also boosted by the dollar’s weakness which shifted investors demand to the shared currency. Following the Euro’s outturn, it traded at GHS6.36; representing a week-on-week appreciation of 0.08 percent on the interbank currency market. The year-to-date depreciation of the cedi thus widened to 2.27 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,193.93 3,041.31 -4.78 -5.86
DJIA 27,110.98 25,605.54 -5.55 -10.28
FTSE 100 6,484.30 6,105.18 -5.85 -19.06
NIKKEI 225 22,863.73 22,305.48 -2.44 -5.71
FTSE/JSEAllShare 54,722.38 52,184.00 -4.64 -8.58
NSE All Share 25,016.30 25,182.67 0.67% -6.18
Nairobi All Share 139.18 142.88 2.66% -14.14

The US equity markets sunk to a three-month low as investors grappled with a sudden spike in covid-19 cases which threatened the re-opening of economies in some states. Investors risk taking appetite thus eased on fears of a second wave of covid-19 infections. The S&P 500 posted a week-on-week loss of 4.78 percent to end the week at 3,041.31 points. The Dow Jones Industrial Average also recorded a weekly loss of 5.55 percent to close at 25,605.54 points.

The London Stocks Exchange closed in the red on account of soft economic data which weighed on investor’s risk-taking sentiments. UK’s GDP contracted by 20.4 percent in April, it’s steepest decline ever, which triggered massive sell-off on fears of an economic recession. The FTSE 100 thus dipped by 5.85 percent to settle at 6,105.18 points.

The Japanese Stock Exchange headed southwards driven by an escalation in new infections of covid-19 following the easing of restrictions in some sectors of the economy. The Paper & Pulp, Railway & Bus and Real Estate sectors were the worst hit as the Nikkei 225 slumped by 2.44 percent to settle at 22,305.48 points.

On the African equity market, The Nigerian All Share Index recorded a week-on-week gain of 0.67 percent to settle at an index level of 25,182.67 points. The Nairobi All Share Index also upturned by 2.66 percent to settle at an index level of 142.88 points. The Johannesburg All Share Index, on the flip side, recorded a weekly decline of by 4.64 percent to settle at 52,184.00 points.

Commodities
Wk. Open Wk. Close Change (%) YTD (%)
Crude Oil $/barrel 42.3 38.73 -8.44 -41.32
Gold $/ounce 1,683.00 1,737.30 3.23 14.06
Cocoa$/metrictonne 2,398.00 2,396.00 -0.08 -5.67
Coffee $/pound 0.989 0.952 -3.74 -26.60
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil tumbled on the international commodities market as rising crude inventory in the US raised concerns of a supply glut. U.S crude inventories jumped by 5.7 million barrels for the week ended June 5 larger than the projected decline of 3.2 million barrels according to the US Energy Information Administration which sparked fears of a supply glut in the oil market. Brent crude oil thus shed $3.57 to close at $38.7 per barrel.

Gold rebounded on account of heightening fears of a second wave of covid-19 infections and a gloomy assessment of the US economy by the US Fed which triggered demand for the safe haven commodity. Gold thus upturned by 3.23 percent to trade at $1,737.30 per ounce.

Cocoa declined in the week under review following above average rainfall recorded in both the western and eastern regions of Top Grower-Ivory Coast Cocoa thus eased marginally by 0.08 percent on the international commodities market to settle at $ 2,396.00 per metric tonne.

Coffee slumped on the international commodities market as the prospects of a global glut in Brazil and Vietnam amid shrinking global demand dragged the coffee prices lower. Coffee thus slipped by 4 cents to close at 95 cents per pound.

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