Weekly Highlights

• Producer Price Inflation settled at 11.1 percent in April 2021
• Yields on short-dated treasury securities eased.
• GSE trimmed the year-to-date gains on its indices as it tumbled.
• Ghana cedi depreciated against the three major trading currencies.
• Nikkei 225 advanced as investors rode on the soft Yuan.
• Gold posted its third straight weekly gain on the international commodities market.

Macroeconomic Update

Producer Price Inflation settled at 11.1 percent in April 2021

Producer Price Inflation settled at 11.1 percent in April 2021, representing 190 basis point decline from the 13.00 percent recorded in March 2021. The rate moderation follows lower input cost across all sectors within the industry sector most especially within the Mining and Quarrying sub-sector. The Mining and Quarrying sub-sector settled at 11.9 percent in April 2021, from the previous month’s rate of 22.7 percent. This represents about 1,080 basis points moderation. The PPI for the Manufacturing sub-sector inched down by 40 basis points to settle at 13.7 percent in April 2021. That for the utilities sub-sector also eased by 10 basis points from the 0.3 percent to 0.2 percent. Presented below is the trend analysis of the PPI.

Key Ghana Economic Data

Indicator 2018 2019 2020 2021 2021
Target Actual
Inflation CPI (y-o-y %) 9.40 7.90 10.40 8.00 8.50
Inflation PPI (y-o-y %) 4.40 13.00 7.00 n/a 11.10
Monetary Policy Rate (%) 17.0 16.00 14.50 n/a 14.50
GDP Growth (y-o-y %) 6.3 6.5 0.4 5.00 n/a
Budget Deficit (% of GDP) 3.8 4.5Sep 11.7 9.50 n/a
Public Debt (% ofGDP) 57.6 63.00 68.3 n/a n/a
Fx. Reserves (M.Cover) 3.7 4.1 4.1 4.00 n/a
Source: BOG; MOFEP; GSS. * represents provisional estimate ** data yet to be released by MoF

Government of Ghana Treasury Securities
Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
May 24 – 28 12.76 13.54 14.10 17.60 17.70 18.30
May 17 – 21 12.79 13.55 14.10 17.60 17.70 18.30
May 10 – 14 12.79 13.57 16.53 17.60 17.70 18.30
2021 Yr. Open 14.09 14.12 17.00 18.50 19.25 19.85
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Interest rates on the Government of Ghana treasury securities trimmed further at the week’s auction. The yield on the 91-Day T-Bill dipped by 3 basis points to settle at 12.76 percent. Yield on the 182-Day T-Bill also fell by a basis point to 13.54 percent. The interest rate on the 364-Day T-Bill was, however, unchanged at 14.10 percent, as it was not part of the week’s issuance. Yields on the Government Treasury Notes and Bonds were also left unchanged.

Results of Auction held on 21st May, 2021

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 476.45 476.45 12.7566
182-Day T-Bill 152.12 152.12 13.5401

Government accepted all the GHS628.57 million bids tendered by investors. The accepted bids missed the week’s target of GHS791.00 million with the 91-Day T-Bill dominating Government’s purchase by 75.79 percent of the total bids purchase. At the upcoming auction, Government envisages raising a total of GHS1,177.00 million worth of bids through the sale of 91-Day, 182-Day, and 364-Day T-Bills.

Illustrated in the diagram above is the term structure of the Government of Ghana treasury securities. The normality of the yield curve hung on the policy directives of the Central Bank in lengthening the term structure of the curve whiles making returns on long-dated instruments comparatively attractive to their short-dated ones. This development seeks to restructure the frequency in payment of interest, whiles allocating funds for longer term investments by the Government.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2017 2018 2019 2020 2021
GSE-CI 52.73 -0.29 -12.25 -13.98 32.64
GSE-FSI 49.51 -6.79 -6.23 -11.73 5.97

The Accra Bourse ended the trading week on a mixed note as profit-taking in MTN Ghana Ltd weighed on the performance of the Benchmark Composite Index. At the close of the week’s trade, the GSE Composite Index ended with a week-on-week loss of 6.17 percent as it settled at an index level of 2,301.79 points. This corresponded to a reduced year-to-date return of 24.45 percent. The GSE Financial Stocks Index, on the other hand, resumed their uptrend following demand pressure in GCB Bank Ltd. The Index thus posted week-on-week gain of 0.49 percent as it rose to an index level of 1,840.99 points, corresponding to a year-to-date return of 6.50 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 6.25 15.78 152.49
Total Value Traded (GHS M) 7.01 25.18 259.30
Market Cap (GHS M) 60,947.10 59,283.27 -2.73

Total stocks that exchanged hands improved in the week’s trading session, when compared to the previous week’s outturn. The week’s trade realized a total of 15.78 million stocks, valued at GHS25.18 million. This represents more than hundred percent increment over the previous week’s traded volume of 6.25 million worth GHS7.012 million. MTN Ghana Ltd led the activity chart with 70.24 percent share of the overall traded volume. The market capitalization, however, declined on account of the selling pressure by 2.73 percent to settle at GHS59,283.27 million.

Stock Price Movements

On the movers’ chart, two advancers and two laggards were recorded at the closing bell of the trade. GCB Bank Ltd topped the advancers, with 25 pesewas gain to trade at GHS5.20 per share. Unilever Ghana Ltd recovered 5 pesewas of recent losses to settle at GHS3.30 per share.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
GCB 4.05 4.95 5.20 0.25 28.40
UNIL 8.29 3.25 3.30 0.05 -60.19

MTN Ghana Ltd appeared in the laggard’s list, after losing 14 pesewas to trade at GHS1.00 per share. CAL Bank Ltd also went down by 2 pesewas to trade at 80 pesewas per share.

Stock Price Laggards in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
CAL 0.69 0.82 0.80 -0.02 15.94
MTNGH 0.64 1.14 1.00 -0.14 56.25

Currency Market
Currency Buying Selling Currency Buying Selling
USD 5.7286 5.7344 CAD 4.7533 4.7575
GBP 8.1158 8.1244 CFA 93.8503 93.9349
EUR 6.9831 6.9894 JPY 0.0526 0.0526
AUD 4.4328 4.4384 ZAR 0.4113 0.4116
NGN 71.7090 72.0579 CNY 0.8904 0.8910
Source: Bank of Ghana 21.04.2021

On the interbank currency market, the Ghana cedi depreciated against all the three major trading currencies. The US dollar was knocked down after the release of Fed’s minutes that suggested that the bank was likely to begin discussions to slow support to any economy that was making significant recovery. This, coupled with the strong commitment by the Bank not to lift its interest rates until 2023, affected the US dollar’s performance. These highlights from the minutes suppressed bullish data on unemployment filling which dropped to its lowest level since mid-March 2020 of 444,000 last week, down from a revised 478,000 claims in the previous week. Despite the US dollar’s lost, it outmuscled the cedi by 0.01 percent at a selling price of GHS5.73. The year-to-date appreciation of the cedi thus reduced to 0.50 percent.

The British pound posted its biggest weekly appreciation in three months on the international forex market as strong economic data buoyed investors’ demand of the currency. UK’s Retail sales outpaced its expectation in April with a growth of 9.2 percent as against a 5.1 percent growth recorded in March and a forecast of 4.5 percent growth. Inflation for April also more than doubled to 1.5 percent from a previous rate of 0.7 percent, following the resumption of economic activities. Finally, data released by its labour department indicated that unemployment rate fell by 0.3 percent to 4.8 percent in the 1st quarter of 2021.This buoyed market sentiment. The British pound thus ended the week with 0.54 percent appreciation, as its selling price rose to GHS8.12 on the interbank currency market. The year-to-date depreciation of the cedi thus rose to 3.02 percent.

The Euro rose marginally on the international currency market as investors reacted to mixed economic data from the Eurozone. Eurozone’s economy contracted in the 1st quarter of 2021, due to the reintroduced lockdown restriction in the bid to containing the spread of the COVID-19 pandemic. GDP contracted for the second time in a row by an annual rate of 1.8 percent in the 1st quarter of 2021. This was, however, slower than the 4.9 percent contraction recorded in the 4th quarter of 2020. Despite this, inflation came in much stronger than expected in April, due to the absence of restriction, to 1.6 percent from March’s rate of 1.3 percent in the Eurozone. Producer Price Inflation posted its highest rate in ten years to 5.2 percent in April 2021 from a reading of 3.7 percent in March 2021. The Euro thus recorded 0.45 percent appreciation against the cedi at a selling price of GHS6.99. The year-to-date appreciation of the cedi thus reduced to 1.12 percent.

International Market
Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 4,173.85 4,155.86 -0.43 10.64
DJIA 34,382.13 34,207.84 -0.51 11.77
FTSE 100 7,043.61 7,018.05 -0.36 8.63
NIKKEI 225 28,084.47 28,317.83 0.83 3.18
FTSE/JSEAllShare 66,598.13 66,238.94 -0.54 11.50
NSE All Share 39,494.70 38,324.07 -2.96 -4.83
Nairobi All Share 165.76 165.76 0.00 8.97

Wallstreet tumbled for the second consecutive week as strong economic data put pressure on growth stocks, which are more likely to be impacted by potential interest hike. In the week’s trade, stocks within the information technology and consumer sectors were the most affected stocks. The S&P 500 thus fell by 0.43 percent to settle at 4,155.86 points. The Dow Jones Industrial Average also went down by 0.51 percent to settle at 34,207.84 points.

The London Stock Exchange was weighed in the week’s trade following the significant surge in the UK’s pound on the international market after the release of bullish economic data which included retail sales. The strong pound negatively affected the demand for stocks as it made stocks relatively expensive to non-pound holders. The FTSE 100 thus recorded a week-on-week decline of 0.36 percent as it dropped to 34,207.84 points.

The Japanese Stock Exchange gained as the dwindling inflation outlook in Japan weaken its currency but boosted the demand for stocks. Inflation witnessed another round of contraction in April by 0.1 percent year-on-year in April in Japan, after recording 0.2 percent contraction in March. The Nikkei 225 thus rose by 0.83 percent to close at 28,317.83 points.

On the African equity market, the Nairobi All Share Index remained unchanged at 165.76 points. The Johannesburg All Share Index, however, finished 0.54 percent lower at 66,238.94 points. The Nairobi All Share Index also posted a week decline of 2.96 percent to settle at 38,324.07 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 68.71 66.44 -3.30 28.26
Gold $/ounce 1,843.85 1,881.85 2.06 -0.70
Cocoa$/metric tonne 2,474.00 2,456.00 -0.73 -5.65
Coffee $/pound 1.4425 1.501 4.06 17.04
Source:www.bloomberg.com, & www.investing.com

Brent crude oil tumbled as investors braced for the return of Iranian crude supplies as talks over nuclear deal between Iran and other advance economies made progress. The projected increase in global supply of the commodity thus weighed on the price of the energy commodity to lose $2.27. It closed the week’s trade at $66.44 per barrel.

Gold clocked its third weekly straight gain on the international commodities market lifted by dwindling yields on US treasury instruments and the commitment by the US Fed to keep interest rates low. Gold thus added $38.00 to trade at $1,881.85 per ounce.

Coffee held unto a positive week-on-week return despite last minute data suggesting improved climatic condition in Brazil. The positive closure of the soft crop followed production cut decision by Safras – a monitoring agency in Brazil – from a previous estimate of 57.1 million bag to 56.5 million bags. Coffee thus added 6 cents to trade at $1.50 per pound.

Cocoa prices headed southwards at the close of the week’s trading session, as improved prospects for Ivory Coast mid-crop season raised over supply concerns on the international market. Data monitored by the International Coffee Exports indicated a sharp rise in inventories to its highest in nearly 4 years due to high export activities in Ivory Coast. Cocoa thus went down by $18.00 to trade at $2,456.00 per metric tonne.

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