Weekly Highlights

• Ghana’s economy contracted in 2nd quarter of 2020
• Business and Consumer sentiment on recovery mode
• Yield on 2-year note upped by 25 basis points, now at 18.50 percent.
• GSE ended the first trading week in the new month in the gains.
• The Ghana cedi depreciated against the British pound.
• Brent crude oil falls on market imbalances.
• Nikkei 225 closed in the red following a hardware failure on the bourse.

Macroeconomic Update
Ghana’s economy contracted in 2nd quarter of 2020
Ghana’s economy sharply declined in the second quarter of 2020 due to the negative impact of the COVID-19 pandemic on many sectors of the economy. GDP contracted by 3.2 percent in the second quarter of 2020, compared to a growth of 4.9 percent in the first quarter of 2020. The performance of the economy was unexciting as compared to last year’s outturn of positive 5.7 percent in the same quarter. GDP for the non-oil sector of the economy also posted a negative growth of 3.4 percent in the 2nd quarter of 2020, relative to the positive 4.3 percent growth in the same comparative period.

The slowdown in economic activities within the Industry and Services sectors, significantly accounted for the growth drag witnessed in the quarter. The Industry sector posted a negative 5.7 percent growth in the reviewed quarter from a previous expansion of 1.5 percent. The services sector, similarly, contracted by 2.6 percent in 2nd quarter of 2020, from a growth of 9.5 percent in 2019 2nd quarter. The Agricultural Sector, however, sustained a reduced growth of 2.5 percent, from a previous rate of 5.4 percent. Despite these dynamics, the services sector dominated in contribution to overall GDP of 47.7 percent. The Industry sector also had 33.1 percent share of GDP with the remaining 19.1 percent share contributed by the Agricultural sector.

Business and Consumer sentiment on recovery mode
Despite the downtrend in overall economic performance in the 2nd quarter of 2020. Business and Consumer sentiment is recording some signs of recovery as it strongly rebounded in the month of July following the easing of restrictions which saw many businesses resuming their operations. The real Composite Index of Economic Activity (CIEA) grew by 3.6 percent in July 2020, as compared to the contraction of 10.6 percent in May, when restrictions were fully enforced. Furthermore, about 95 percent of businesses surveyed by the Bank of Ghana showed strong optimism after the easing of restrictions and this accounts for the uptick in the CIEA index. These are expected to translate into improved production and overall to reverse the direction of growth. 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 10.50
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 9.00
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
Oct 05 – 09 14.05 14.14 16.98 18.50 19.00 19.25
Sep 28 – Oct 2 14.04 14.15 16.99 18.25 19.00 19.25
Sep 21 – 25 14.01 14.12 16.99 18.25 19.00 19.25
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.

Interest rates on the Government of Ghana treasury securities were slightly adjusted in the week-under-review. The yield on the 91-Day T-Bill rose by a basis point to 14.05 percent. That rates on the 182-Day and 364-Day T-Bills, however, fell by a basis point each to settle at 14.14 percent and 16.98 percent, respectively. Yields on Government treasury notes and bonds were unchanged.

Results of Auction held on 2nd October, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 495.37 495.37 14.0461
182-Day T-Bill 104.22 104.22 14.1386
364-Day T-Bill 231.62 221.62 16.9804
2-Yr Note 1,525.03 1,525.03 18.5000

A total of GHS821.21 million bids were accepted by Government at the week’s auction out of the GHS831.21 million tendered by investors. The amount exceeded the week’s target of GHS712.00 million but fell below the GHS826.02 million accepted at the previous week session. Government also raised an amount of GHS1,5255.03 million from the issuance of the 2-year note at higher rate of 18.25 percent, bringing the total bids accepted to GHS2,346.24 million. At the upcoming auction, an amount of GHS876.00 million is targeted to be raised from the sale of the 91-Day, and 364-Day T-Bills.

As expected, the yield curve sustained its normality as demand and supply forces on the money market continue to balance. The safe-haven bet adopted by investors vis-à-vis Government’s needs of funds to finance its developmental projects are factors contributing to the stability of the yield curve in recent times. The expected recovery of the Ghanaian economy as anticipated by the CIEA and some major economic indicators, such as inflation, are expected to boost investor sentiments and in turn improve the outlook of the money market.

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 -18.23
GSE-FSI -19.93 49.51 -6.79 -6.23 -16.96

The Ghana Stock Exchange ended the first trading week in the new month in the gains as demand pressures in some financial sector stocks lifted the indices. The GSE Composite Index, thus recorded a week-on-week gain of 0.61 percent as it settled at an index level of 1,845.66 points. This corresponded to a year-to-date loss of 18.23 percent. The GSE Financial Stocks Index also registered a weekly gain of 1.23 percent to settle at 1,677.11 points, representing a year-to-date loss of 16.96 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 6.51 7.39 13.52
Total Value Traded (GHS M) 3.97 7.87 98.24
Market Cap (GHS M) 52,927.83 53,045.37 0.22

The week’s trade realized a total volume of 7.39 million shares valued at GHS7.87 million exchanging hands. This represents 13.52 percent increment over the 6.51 million stocks valued at GHS3.97 million recorded last trading session. Liquidity on the bourse was largely driven by Fan Milk Ltd as it accounted for 92.84 percent of the overall traded stocks. The GSE market capitalization also upturned by 0.22 percent to settle at GHS 53,045.37 million.

Stock Price Movements

At the pairing of the week’s opening and closing prices, no decliner was recorded. Standard Chartered Bank Ghana PLC, however, led the advancers; it upped by 45 pesewas to close at GHS14.00 per share. Ecobank Ghana PLC and Republic Bank (Ghana) PLC also jumped by 15 pesewas and a pesewa to trade at GHS7.00 per share and 41 pesewas per share, respectively.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
SCB 18.40 13.55 14.00 0.45 3.32
EGH 8.09 6.85 7.00 0.15 2.19
RBGH 0.56 0.40 0.41 0.01 2.50
Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7000 5.7058 CAD 4.2822 4.2859
GBP 7.3736 7.3815 CFA 98.1061 98.1942
EUR 6.6802 6.6862 JPY 0.0541 0.0542
AUD 4.0820 4.0879 ZAR 0.3460 0.3464
NGN 67.1150 67.4218 CNY 0.8393 0.8401
Source: Bank of Ghana 02.10.2020

On the interbank forex market, the Ghana Cedi was outmuscled by the three main trading currencies. The US Dollar rose on the international currency market, buoyed by the release of upbeat employment data from the US. Non-farm payroll employment in the world’s largest economy surged by 661,000 in September 2020, and the unemployment rate eased to 7.9 percent. This follows the gradual resumption in economic activities in several states in the US, signalling economic recovery. The greenback rode on this development to sell at GHS5.71 in the trading week; representing a week-on-week appreciation of 0.02 percent. The year-to-date depreciation of the cedi thus widened to 2.97 percent.

The British Pound was significantly lifted in the early trading sessions of the week-under-review, following the commencement of a three-day negotiation aimed at reaching a trade deal with the European Union. The extent of the pound’s rise was, however, trimmed by the European Union’s decision to begin legal proceedings against the UK after it refused to withdraw its Internal market bill that undermines sections of the Divorce deal. The British Pound thus posted a weekly gain of 1.86 percent on the interbank currency market to sell at GHS7.38. The Ghana cedi thus posted a year-to-date depreciation of 0.83 percent.

The Euro tumbled on downbeat economic data which blurred the economic outlook of the bloc. Preliminary inflation data for September in the bloc missed the ECB ‘s target of 2 percent as it sank to -0.3 percent, amid plans by the European Central Bank to tweak its current inflation policy; allowing inflation to exceed the set target to strengthen the capacity of monetary policy to stabilize the economy. Despite the single currency’s outturn, it appreciated by 0.87 percent on the interbank forex market to sell at GHS6.69. The year-to-date depreciation of the cedi thus upped to 7.08 percent.

International Market

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,298.46 3,348.44 1.52% 3.64%
DJIA 27,173.96 27,682.81 1.87% -3.00%
FTSE 100 5,842.67 5,902.12 1.02% -21.75%
NIKKEI 225 23,204.62 23,029.90 -0.75% -2.65%
FTSE/JSE All Share 53,587.11 54,219.24 1.18% -5.02%
NSE All Share 26,319.47 26,985.77 2.53% 0.54%
Nairobi All Share 140.37 140.22 -0.11% -15.74%

Wallstreet closed the trading week in the gains despite a significant sell-off last Friday, following reports that the US President tested positive for Covid-19 signaling that the virus was far from containment in the world’s largest economy. The positive closure of the market steamed from previous upward rally of the bourse supported by the positive sentiment surrounding the progress in the passage of another stimulus package by US house of Senate to cushion its economy. The S&P 500 thus recorded a gain of 1.52 percent to settle at 3,348.44 points. The Dow Jones Industrial Average also rose by 1.87 percent to settle at an index level of 27,682.81 points.

The London Stocks Exchange was lifted by the extent of progress surrounding the resumption of trade talks between the UK Government and the European Union. The growing hope that a much favourable deal could be obtained amidst a call for another stimulus package as infection cases rises sparked demand on the bourse. The FSTE 100 thus ended a week-on-week gain of 1.02 percent to trade at 5,902.12 points.

The Japanese Stock Exchange closed in the red following a hardware failure which shut down trading last Thursday. This was its worst outage ever suffered since adopting an all-electronic trading in 1999, leaving investors unable to exercise their rights on the bourse. The down drive of the bourse also followed market reaction to the mandatory enforcement of paternity leave for Japanese Companies by the Government as they believe could affect overall performance of the firm. The Nikkei 225 thus went down by 0.75 percent to settle at 23,029.90 points.

On the African equity market, the Johannesburg All Share Index rebounded by 1.18 percent to settle at 54,219.24 points. The Nigerian All Share Index also rose further by 2.53 percent to 26,985.77 points. The Nairobi All Share Index, however, posted a weekly loss of 0.11 percent as it settled at 140.22 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 41.92 39.27 -6.32 -40.50
Gold $/ounce 1,866.30 1,907.60 2.21 25.24
Cocoa$/metric tonne 2,568.00 2,482.00 -3.35 -2.28
Coffee $/pound 1.136 1.0895 -4.09 -16.00
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil dwindled on the international commodities market on account of market imbalances. The energy commodity was subdued as the demand side of the market continues to shrink due to rising new infection cases leading to a fear of the imposition of another restriction and slowness in economic activities in the world largest consumer – China. Contrary to this development, the supply side kept expanding with significant supply from Libya and Iran which resulted in a daily rise of 160,000 barrels per day in September 2020. Brent crude oil thus fell by $2.65 to trade at $39.27 per barrel.

Gold upped its value on the international commodities market spurred by growing risk aversion mode of investors due to the rising number of new infections in the advanced economies. The bullion was further lifted by speculations that the US was likely to approve a COVID-19 stimulus package that was left hanging several weeks until Trump’s testing positive. Gold thus added $41.30 to trade at $1,907.60 per ounce.

Cocoa trimmed its unit price on excess supply of the beans onto the global market by Ivory Coast. The improved climatic conditions, amidst higher volumes of production in Ivory Coast resulting in bumper harvest, lowered the price of the soft crop. Cocoa thus shed $86.00 to trade at $2,482.00 per metric tonne.

Coffee dropped to about 2 months-low on the international commodities market as climatic conditions improved in Brazil. Rainfall measuring about 31.5 mm, equivalent of 157 percent historical average, and predictions of higher volumes of production of about 47.4 million bags by the Brazilian Government negatively affected its pricing in the reviewed period. Coffee thus dipped by 5 cents to close at S1.09 per pound.

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