• Inflation dropped to 10.5 percent in August.
• Yield on 182-Day T-Bill edged down by 2 basis points.
• GSE headed southward.
• The Cedi posted positive year-to-date appreciation against the British Pound.
• Brent crude oil tumbled on supply-demand imbalances on the international commodities market.

Macroeconomic Update

Inflation dropped to 10.5 percent in August
Consumer price inflation for the month of August eased by 90 basis points from July’s rate of 11.40 percent to settle at 10.5 percent. This downturn of the inflation index in the month of August was attributed to reduced inflationary pressures following the substantial easing of the COVID-19 restrictions and dwindling ill-sentiment which surrounded the pandemic. These factors contributed to the price hike in basic commodities. In the month of August, the rate of price increment for the food and non-alcoholic beverages sector slowed significantly by 230 basis points to 11.4 percent from a previous rate of 13.7 percent. In spite of the general easing inflationary pressure within the sector for the month under review, Vegetables (21.3%) and Fish & other Seafood (14.3%) had the highest inflation rates, albeit lower than their respective rates of 28.2 percent and 16.1 percent,respectively in July..

The Non-Food sub-sector, on the other hand, had its inflation rising by 0.2 percent from the 9.7 percent in July to 9.9 percent in August, with the rise attributable to high inflationary pressures within the Housing & utilities (20.3%) and Transport (9.9%) segments. At the regional levels, Greater Accra Region recorded the highest price surge in the month of August with inflation rate of 13.5 percent and was keenly followed by the Eastern Region of 11.9 percent. Volta Region recorded the lowest inflation for August at 4.7 percent.

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 9.30
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 4.9 Q1
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 4.7 6.3
Public Debt (% of GDP) 69.8 57.6 63.00 n/a 67
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 4.3
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
Sep 14 – 18 14.02 14.09 16.91 18.25 18.85 19.25
Sep 07 – 11 14.02 14.11 16.91 18.25 18.85 19.25
Aug 31– Sep 04 14.06 14.08 16.83 18.25 18.85 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 short-dated treasury securities was mixed adjusted at the week’s trading auction. The yield on the 91-Day T-Bill remained unchanged at 14.02 percent but that on the 182-Day T-Bill dropped down by 2 basis points to settle at 14.09 percent. The yield on the 364-Day T-Bill however was unchanged at 16.91 percent as it was not part of the week’s auction. That on the other treasury securities were also unaltered after the week’s auction as they were not scheduled for the week’s auction.

Results of Auction held on 11th September, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 755.77 755.77 14.0219
182-Day T-Bill 104.63 104.63 14.0878

At the close of the auction, Government of Ghana accepted a total of GHS860.40 million bids, falling below the week’s target of GHS929.00 million and the GHS1.03 billion raised at the previous auction. Government accepted more of the 91-Day T-Bill than any other treasury instrument as it constituted 87.84 percent of the overall bids raised. An amount of GHS1,004.00 million is targeted to be raised at the upcoming auction from the sale of the 91-Day, 182-Day, and 364-Day T-Bills.

As largely anticipated, the yield curve sustained its normality. This follows the general positive sentiment dominating the money market. Government’s continued demand for funds to finance its projects vis-à-vis the persisting risk adverse sentiment of investors are factors contributing to bullish outlook of the 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 -19.02
GSE-FSI -19.93 49.51 -6.79 -6.23 -17.52

Trading on the Ghana Stocks Exchange ended in the red as some corporate actions within the trading week affected market sentiment. Société Générale Ghana Ltd.’s decision to reduce its early dividend payment of 99.1 percent of its initial distributable profits to 49.56 percent i.e. GHS0.045 per share, citing threat of the COVID-19 pandemic to its operations, came as mixed feelings to the investing public. Enterprise Ghana Ltd.’s announcement of an additional 1,172,000 ordinary shares as the company’s employees exercise their rights under the Executive Share Option Scheme also sparked concerns. At the closing bell, the GSE Composite Index thus fell by 0.67 percent to an index level of 1,827.80 points, corresponding to a year-to-date loss of 19.02 percent. The GSE Financial Stocks Index, similarly, went down by 1.27 percent to settle at 1,665.89 points, representing a year-to-date loss of 17.52 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 9.59 0.27 -97.15
Total Value Traded (GHS M) 7.64 0.35 -95.46
Market Cap (GHS M) 52,464.48 53,023.28 1.07

Market activities realized a total volume of 0.27 million shares exchanging hands at GHS0.35 million after the week’s trade. This represent 97.15 percent decline over the previous outturn of 9.59 million shares valued at GHS7.64 million. Fan Milk Ltd led the activity chart with 36.91 percent of the overall traded volume. The market capitalization, however, rose by 1.07 percent to close at GHS53,023.28 million.

Stock Price Movements

In all, six equities altered their share prices after the week’s trading activities. GCB Bank Ltd led the bull’s run with price appreciation of 10 pesewas to trade at GHS3.70 per share. Ecobank Ghana Ltd and CAL Bank Ltd also gained 7 pesewas and 4 pesewas to trade at GHS6.85 and 68 pesewas per share, respectively. CPC Ltd also gained a pesewa to trade at 3 pesewas per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 5.10 3.60 3.70 0.10 2.78
EGH 8.09 6.78 6.85 0.07 1.03
CAL 0.89 0.64 0.68 0.04 6.25
CPC 0.02 0.02 0.03 0.01 50.00

On the flip side, Standard Chartered Bank Ltd was the biggest decliner with GHS1.47 loss to settle at GHS13.53 per share. Benso Oil Palm Plantation Ltd also shed 14 pesewas to trade at GHS2.11 per share.

Stock Price Losers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
BOPP 2.86 2.25 2.11 -0.14 -6.22%
SCB 18.40 15.00 13.53 -1.47 -9.80%

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.6939 5.6995 CAD 4.3184 4.3223
GBP 7.2779 7.2857 CFA 97.2263 97.3129
EUR 6.7407 6.7467 JPY 0.0536 0.0537
AUD 4.1433 4.1485 ZAR 0.3404 0.3407
NGN 66.7931 67.0564 CNY 0.8333 0.8338
Source: Bank of Ghana 11.09.2020

The interbank currency market ended with the Ghana cedi accelerating its recovery against the British pound but depreciating versus the US dollar and the Euro. The US dollar firmed on the international currency market, supported by labour market data and inflationary pressure at US production sector. Filing for weekly Unemployment benefits continues to be below the pandemic records with figure below 900,000 signalling expansion in the labour market. On the back of this, unemployment rate has reduced by 2 percentage points to 8.4 percent in August in the US. The Producer Price Inflation in the US, which sustained its uptick by recording 0.3 percent rise in August, also contributed to the US dollar’s gains. The US dollar thus recorded a week-on-week gain of 0.05 percent to trade at GHS5.70 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 2.86 percent.

The British Pound tumbled as it sunk to its lowest in six-weeks on the international currency market following the slowness in securing a trade deal with the European Union before the October deadline. The little progress towards striking a deal and UK’s introduction of a new draft legislation in a recent negotiation angered the European Union, clouding the market in uncertainties. The fear that it may derail the trade talks and further lead to a chaotic “no-deal” Brexit weighed on the Pound sterling’s outturn in the trading week. The Pound thus recorded a week-on-week depreciation of 3.15 percent on the interbank currency market as it reduced its selling price to GHS7.29. The Ghana cedi thus posted a year-to-date appreciation of 0.47 percent.

The Euro rebounded on the international forex market lifted by investors' sentiment surrounding the policy directions of the European Central Bank. The decision to leave interest rates unchanged and attributing recent resurgence of the currency to recovery in fundamental indicators of its economy buoyed the demand for the Euro. The lower-than-expected contraction in growth set by the European Central Bank at negative 8 percent for 2020 against an earlier projection of negative 8.7 percent further supported the single currency. The Euro thus advanced by 0.47 percent on the interbank currency market as its value rose to GHS6.75. The year-to-date depreciation of the cedi thus increased to 7.91 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,426.96 3,340.97 -2.51 3.41
DJIA 28,133.31 27,665.64 -1.66 -3.06
FTSE 100 5,799.08 6,032.09 4.02 -20.02
NIKKEI 225 23,205.43 23,406.49 0.87 -1.06
FTSE/JSE All Share 53,878.95 56,087.84 4.10 -1.75
NSE All Share 25,605.64 25,591.95 -0.05 -4.66
Nairobi All Share 139.27 140.87 1.15 -15.35

The US equity market drove further southward on hopes that the US Fed will ramp up asset purchases in bid to boost the US economy. The Fed is expected in the coming week to switch its Treasury purchases towards more long-dated debt instruments at reduced lower rates. This development sparked heavy selloffs in telecommunications stocks. The S&P 500 thus fell by 2.51 to settle at 3,340.97 points. The Dow Jones Industrial Average Index also recorded a weekly decline of 1.66 percent to close at 27,665.64 points.

The London Stock Exchange finished the week’s trade in gains as the British pound came under pressure on account of the Brexit uncertainties. Multinational investors capitalized on these developments and upped their demand for UK stocks. The FTSE 100 thus posted a week-on-week gain of 4.02 percent to settle at 6,032.09 points.

The Japanese Stock Exchange sustained its upward rally on the back of continued support by the soft Japanese Yen which triggered massive demand in Telecommunication stocks. The Nikkei 225 thus recorded a weekly rise pf 0.87 percent as it settled at 23,406.49 points.

On the African equity market, the Johannesburg All Share Index closed with a weekly gain of 4.10 percent to settle at 56,087.84 points. The Nairobi All Share Index also rose by 1.15 percent to settle at 140.8 points, but the Nigerian All Share Index dropped by 0.05 percent to 25,591.95 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 42.66 39.83 -6.63 -39.65
Gold $/ounce 1,934.30 1,947.90 0.70 27.89
Cocoa$/metric tonne 2,664.00 2,620.00 -1.65 3.15
Coffee $/pound 1.348 1.3335 -1.08 2.81
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil fell on growing signs of imbalances between supply and demand on the international commodities market. The continued pile up of crude oil inventories in the world’s largest consumer – China vis-à-vis production rise in US by 2.03 million barrels for the week ended 4th September affected the energy commodity. Brent crude oil thus dropped by $2.83 to trade at $39.83 per barrel.

Gold posted a gain spurred by the new policy directive by the European Central Bank as it left its interest rate unchanged. The development which halted the previous bullish rally in various equity markets sparked investors’ shift in taste towards the safe-haven commodity. Gold thus added $13.60 to trade at $1947.90 per ounce.

Cocoa eased further this week as climatic conditions continued to improve in Ivory Coast boosting chances of a much better production outcome in the October-March crop season. Rainfall which averagely stood at 61.6 millimeters, representing about 32.2 millimeters above a 5-year average in Ivory Coast contributed to the upbeat production assessment. Cocoa thus shed $44.00 to settle at $2,620.00 per metric tonne.

Coffee tumbled despite inventory decline in the supply of the soft crop from Brazil and Vietnam onto the international commodities market. The decline in the soft crop was triggered by the softening of the Brazilian real against the US dollar. Coffee thus shed a cent to settle at $1.33 per pound.

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