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Inflation moderates for five consecutive months
Ghana’s headline inflation eased for the 5th consecutive month as it settled at 13.20 per cent in February 2017. This represents a 0.1 percentage point reduction from January’s figure of 13.30 per cent.
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The downtrend emanated from lower rate at the non-food component of the CPI as it trimmed 0.2 percentage point as against the food component which added 0.1 percentage point.
Inflation at the food and beverages component of the CPI settled at 7.10 per cent whereas the non-food component recorded a rate of 16.40 per cent.
Cedi performance
The local currency stood strong in the week under review against its major trading partners. The Ghana cedi recorded its first week-on-week gain against the dollar by 1.28 per cent on the back of supply boost. The recent interest rate hike from 0.75 per cent to 1.00 per cent in the U.S failed to support the value of the dollar against its peers as dovish signal of future interest rate hike dampened investors’ confidence. The cedi exchanged lower at GH¢4.54 with a year-to-date depreciation of 8.20 per cent.
The Euro stripped 0.21 per cent of its value as investors sentiment dropped sharply in relations to France elections. This subdued Germany’s upbeat inflation data of 2.2 per cent, which cushioned the 19-bloc currency in earlier trading sessions. The Euro traded at GH¢4.88 last Friday, representing a year-to-date appreciation of 10.03 per cent against the Cedi.
The British Pound stood stronger on the international currency market as investor sentiment increased after a poll revealed that the Scots are considering remaining in the United Kingdom. This calmed fears on the UK’s economy and subsequent boost for the pound. The Pound recorded 0.45 per cent gains over the Ghana cedi to exchange higher at GH¢5.62, with a year-to-date appreciation of 8.15 per cent.
Commodities
Brent crude gained 0.60 per cent following a surprise drop in oil inventories in the United States and the weakening of the dollar on the currency market. Brent crude was selling at $51.68 per barrel. A potential price drop is anticipated as investors remain skeptical about Saudi Arabia’s tendency of increasing its production output.
Price of gold rose sharply on the commodities market on the back of weakened dollar as investors mulled over the more dovish than expected pace of future rate hikes in the U.S. The precious metal saw 2.37 per cent week-on-week gains to close at $1,229.15 per ounce.
Emerging issues of high acidity of cocoa beans in Cote d’Iviore pushed the price of the commodity higher on the international commodities market due to the supply shortages which emanated from the rejection of the beans. Price of the soft crop rose by $87.50 to trade at $2,018.50 per metric tonne.
Coffee closed 0.11 per cent lower at $1.41 per pound last Friday. The downtrends of the commodity came as a result of supply boost of the commodity in top grower countries, Brazil and Vietnam.
Stock market
The equity market firmed its gains as investor sentiments soared following government’s decision at halting the cedi’ depreciation amidst the trickling in of 2016 Financial Year earnings report of some companies.
The GSE Composite Index rose by 0.61 per cent to 1,879.60 points, representing a year-to-date return of 11.28 per cent. The GSE Financial Stock Index also enhanced its performance by 1.09 per cent to 1,786.95 points to record a year-to-date return of 15.63 per cent.
Twenty-three equities participated in the week’s trading activities on the bourse. A total volume of 14.27 million shares valued at GH¢11.60 million changed hands, representing about 300 per cent increment over previous week’s traded volume.
African Champion Ltd, Guinness Ghana Brewery Ltd and Societe Generale Ghana Ltd were actively traded equities, jointly accounting for 79.34 per cent of the week’s total traded volume. Market capitalisation, however, declined by 0.31 per cent to GH¢48,994.10 million.
Eight advancers and five laggards were recorded at the floor of the Exchange. Standard Chartered Bank gained 38 pesewas to trade at GH¢15.38 per share. Unilever Ghana Ltd and GCB Bank Ltd also added 14 pesewas and 11 pesewas to trade at GH¢9.00 and GH¢5.00 per shares, respectively. Aluworks Ltd, Benso Oil Palm Plantation, Ecobank Ghana Ltd, Ghana Oil Petroleum Ltd and UT Bank Ltd also witnessed price gains.
Tullow Oil Plc shed 25 pesewas to trade at GH¢21.00 per share. Total Petroleum Ltd also lost 12 pesewas to trade at GH¢2.18 per share. Cocoa Processing Co. Ltd, CAL Bank and Societe Generale Ghana Ltd lost some pesewas to close the list of laggards.
Treasury market
Yields on short-dated treasury securities continue to adjust to suit investors demand as government seeks to rebalance its finances. The Government of Ghana 91-day Treasury bill rate increased by 76 basis points (bps) to 17.21 per cent whereas the 182-day Treasury bill rate declined by 7bps to 17.09 per cent. Yields on other treasuries, however, stood same.
Government accepted GH¢919.88 million worth of bids out of the GH¢947.93 million bids tendered in last Friday’s auction. This was 17.89 per cent lower than the week’s target of GH¢1.12 billion. The 91-day and 182-day Treasury Securities constituted 82.20 per cent of the total accepted bids. Schedule for the 91-day and 182-day Treasury Securities at next auction is targeted GH¢1.19 billion.
The rate adjustments in the week’s auction has dampened effort at restoring a regular yield curve. To achieve a regular pattern, government needs to have another look at yields of both the 91-Day bill and 5-year fixed note treasury securities.