• 3rd quarter GDP dropped to 5.6 percent
• November’s Producer Price Inflation at 9.90 percent
• Yield on 182-Day T-Bills upped by a basis point.
• GSE posted mixed performance.
• Cedi advanced against the British pound and the Euro.
• Brent crude oil jumped to a 3-month high on easing trade uncertainties.

Macroeconomic Update

3^rd quarter GDP dropped to 5.6 percent

Gross domestic product (GDP) has consistently declined, recording it’s fourth slide since 3^rd quarter of 2018. GDP (oil) dropped to 5.6 percent in the 3^rd quarter of 2019, down from the 7.4 percent recorded in the same period a year ago. GDP (non-oil) also sharply dropped to 4.6 percent in 3^rd quarter of 2019 from the 8.5 percent recorded in the 3^rd quarter of 2018. This is the lowest rate recorded since the beginning of the year and the moderation attributed to lower economic activities turnout at both the services and industry sectors of the economy.

Between 3^rd quarter of 2018, GDP for the industry sector consistently declined from 11.7 percent to 6.1 percent in the 2^nd quarter of 2019 and further to 5.7 percent in 3^rd quarter of 2019. GDP for the services sector has recorded declines from the 1^st quarter of 2019 of a rate of 7.2 percent to 6.5 percent in second quarter and further to 5.7 percent in the 3^rd quarter. Economic activities, however, has recorded some improvement at the agriculture sector with consistent rise from 2.2 percent in 1^st quarter of 2019 to 3.1 percent in second quarter and finally to 5.9 percent in 3^rd quarter.

Gross domestic product at current prices for the 3^rd quarter of 2019 is estimated at GHS85,268.50 million as compared to the GHS74,222.60 million recorded in the 3^rd quarter of 2018. In constant terms, GDP is estimated at GHS41,512.70 million as compared to the GHS39,299.40 million recorded in the 3^rd quarter of 2018. Sectorial contribution to GDP continues to be dominated by the services sector with 45.8 percent share. This is followed by the Industry sector which contributed 35.7 percent share of the GDP and the Agriculture sector contributing 18.5 percent of GDP.

November’s Producer Price Inflation at 9.90 percent

The producer price inflation (PPI) for the month of November significantly rose by 100 basis points to settle at 9.90 percent from October’s rate of 8.90 percent. The uptrend is attributed to the higher input cost of production mainly resulting from the weakening of the Ghana cedi against its major peers and over reliance of imported raw materials by local industries. This is evidenced by the sharp rise in the PPI for the manufacturing sub-sector which constitutes about 67 percent of the entire industry sector. The PPI jumped by 140 basis points to settle at 4.5 percent. The PPI for the utilities sub-sector however, rose marginally by 10 basis points to 12.6 percent but the PPI for the Mining and Quarrying sub-sector dropped by 50 basis points to 33.9 percent.  Presented below is a 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.

Last Friday, interest rate on the 182-Day T-Bill rose marginally by a basis point to settle at 15.16 percent. The yield on the 91-Day and 364-Day T-Bills, however, remained unchanged at 14.70 percent and 17.90 percent respectively. The yields on treasury notes and bonds were, however, unaltered after the week’s auction.

Government raised a total of GHS1,061.59 million bids at the auction, after accepting all bids tendered by investors. This was below the GHS1,352.00 million targeted to be raised in the week under review. The 91-Day T-Bill dominated Government’s purchase as it constituted 57.16 percent of the overall bids accepted by the Government. In the upcoming auction, GHS764.00 million of bids is expected to be raised by the Government from the sale of both the 91-Day and 182-Day Treasury bills.

Despite the relatively higher yield on the 2-year treasury note over the 3-Year and 5-Year bonds, the yield curve is said to be normal following its general upward sloping nature. The continued investor confidence in the domestic economy and the commitment by the Bank of Ghana strong to make long dated treasury securities much attractive to their short-dated counterparts are some reasons contributing to the maintenance of the normality of the yield curve.  

Ghana Stock Exchange

The Accra Bourse continued to show signs of recovery despite ending the trading week on a mixed note.  Easing investors’ uncertainties and anticipation of dividend declaration by some listed companies in the coming year has significantly contributed in the recovery of some blue-chip stocks especially from the financial sector. At the end of the trading week, the GSE Composite Index dropped by 0.46 percent to settle at an index level of 2,222.86 points, representing a year-to-date loss of 13.58 percent. The GSE Financial Stocks Index however, upticked by 0.26 percent to settle at 1,964.14 points, reducing the year-to-date loss to 8.80 percent.

Market turnout realized a total of 824,034 million shares valued at GHS1.27 million exchanging hands. This represents 68.70 percent reductions of the previous week’s traded volume of 2.65 million valued at GHS1.97 million. MTN Ghana Ltd led the activity chart with 26.75 percent of the overall traded volume. Market capitalization also dropped by 0.19 percent to GHS56,438.75 million after the week’s trading activities.

Stock Price Movements

At the paring of the week’s opening and closing prices, a total of nine equities altered their share prices. GCB Bank Ltd posted the most gains with price uplift of 10 pesewas to trade at GHS5.00 per share. Access Bank Ghana Ltd and Standard Chartered Bank Ltd recorded gains of 25 pesewas and 9 pesewas to trade at GHS5.00 and GHS19.09 per share respectively. Ecobank Ghana Ltd also joined the advancers with price appreciations of 5 pesewas to close at GHS7.30 per share.

On the downside, Total Oil Petroleum Ltd was the worst performing stock, losing 10 pesewas of its opening price to close at GHS3.50 per share. Republic Bank Ghana Ltd and Enterprise Group Ltd joined with price declines of 7 pesewas and 5 pesewas to settle at 48 pesewas and GHS1.65 per share respectively. MTN Ghana Ltd and SIC Ltd followed with price declines of 1 pesewa to settle at 69 pesewas and 8 pesewas per share respectively.

Currency Market

Source: Bank of Ghana 20.12.19

The Ghana cedi advanced against the British pound and the Euro but tumbled versus the US dollar. The US dollar rose to a month high on the international forex market following a string of upbeat economic data which dimmed fears of an in imminent rate cut by the US Fed. In the week under review, the US Gross domestic product for the 3^rd quarter of 2019 was confirmed at 2.1 percent, improving marginally over the 2^nd quarter rate of 2.0 percent. US’ manufacturing production also grew by 1.1 percent in November from the previous month’s contraction of 0.7 percent whereas Industrial production also improved growing by 1.1 percent in November from the 0.9 percent recorded in October. Following the US Dollar’s outturn, it appreciated by 0.02 percent to sell at GHS5.54 on the interbank currency market. The year-to-date depreciation of the cedi thus widened to 12.99 percent.

The British pound sunk to a two-year low against major peers as the Bank of England left its interest rates unchanged at 0.75 percent amid Brexit uncertainties. Investor’s hopes in the conservative party’s victory in the recently held general election waned as Boris Johnson quashed talks of a possible extension of the Brexit negotiation deadline with the EU, sparking fears of Britain leaving the bloc without a favourable trade deal. The British pound thus posted a week-on-week decline of 0.16 percent to sell at GHS7.23 on the interbank currency market. The year-to-date depreciation of the cedi thus narrowed to 16.64 percent.

The Euro dimmed its shine on the international currency market as cooling economic data from the Eurozone clouded investors with uncertainties. Eurozone’s inflation for November although aligning with market anticipation of 1.0 percent rise, significantly fell below the 2.0 percent benchmark set by the European Central Bank. On the back of this, policy advisors have urged the Bank to adopt fiscal policy instruments by way of investing more into its economies to create jobs which will in turn boost inflation in the region. Data on consumer sentiment anticipation also appears weak most especially in Eurozone’s largest economy – Germany as its index for January 2020 dropped to 9.6 points from December’s figure of 9.7 points. The Euro thus recorded a week-on-week depreciation of 0.41 percent as it traded at GHS6.15 on the interbank currency market. The year-to-date depreciation of the cedi thus reduced to 10.24 percent.

International Markets

Mixed performance was recorded on major Bourses on the international equities market. The US equity market had its indices all ending on a positive note lifted by bullish sentiment surrounding US economy and the recently ended phase one of the US and China trade negotiation. Upbeat consumer spending data, Gross domestic product and manufacturing activities in the world’s largest economy – US spurred risk taking especially within the Telecoms, Oil & Gas and Healthcare sectors which helped close the trading week on a brighter note. The S&P 500 thus posted a week-on-week gain of 1.65 percent to settle at 3,221.22 points. The Dow Jones Industrial Average also recorded a weekly rise of 1.14 percent to settle at 28,455.09 points.

The London Stock Exchange closed the trading week in the gains following signs of economy recovery in the UK and rising confidence in the newly appointed Governor of the Bank of England. UK’s GDP for the 3^rd quarter was revised to 0.4 percent from the earlier reading of 0.3 percent raising investors’ optimism about the prospects of the UK economy. Furthermore, the rising confidence of investors in Andrew Bailey – Governor of the Bank of England to perform much better than his predecessor – Mark Carney buoyed sentiment on the bourse leading to significant rise in health sector shares. The FTSE 100 thus made a week-on-week rise of 3.11 percent to settle at 7,582.48 points.

The Japanese Stock Exchange ended in the red dragged by significant selling pressures recorded in shares of Paper & Pulp, Railway & Bus and Real Estate sectors. The Nikkei 225 thus posted a week-on-week decline by 0.86 percent to settle at 23,816.63 points.

On the African equity market, the Johannesburg All Share Index rebounded by 0.04 percent to settle at 57,411.21 points. The Nairobi All Share Index also recorded a week-on-week gain of 0.38 percent to settle at 160.90 points. The Nigerian All Share Index, however, went down by 0.04 percent to close at 26,526.35 points.

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

Brent crude oil climbed further buoyed by the partial resolution of the US-China trade negotiation as well as the production cut decision by OPEC to eliminate supply glut on the international commodities market. Brent crude oil thus added 92 cents to trade at $66.14 per barrel.

Gold slipped after the week’s trade as bullish consumer spending data which grew at 3.2 percent in the 3^rd quarter of 2019 from a previous rate of 2.9 percent in the US eased recession fears to lower investors demand for the safe-haven commodity. Gold thus shed 30 cents to trade at $1,480.90 per ounce.

Cocoa dimmed its shine on the international commodities market following the plans by farmers in top grower – Ivory Coast to ignore the price-ceiling measures as means of shoring-up their revenues. This came after speculations that there were no other business alternatives for them to engage in to generate the revenue during the full implementation of the production-cut decision. 0Cocoa thus dropped by $153.50 to settle at $2,417.00 per metric tonne.

Coffee pulled back from a 2-year high weighed by the weakening Brazilian real despite fund buying and supply tightness in Brazil and Vietnam which is ideally expected to propel the soft crop. Coffee thus shed a cent to close at $1.30 per pound.

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