Ghana Market Update - Cal Asset Management Company Ltd.

Investment Climate Brief 29th Jun - 3rd Jul '20

The two indices on the local bourse, GSE-CI and GSE-FSI, posted sharp weekly declines of -2.52% and -1.53% respectively.
Government complemented its short-term fundraising with the issuance of a 5-Year Bond.

ECONOMIC SCOOP

MTNGH seeks Judicial review of the National Communications Authority's (NCA) Significant Market Power (SMP) declaration

Subsequent to the NCA's move to initiate regulatory measures to curb MTNGH's dominance in the telecom industry, MTNGH has sought judicial interpretation of its status in the telecom industry and of the NCA's procedures.
The NCA's classification of MTNGH as an SMP is expected to limit the company's expansion and competitiveness with the aim of making the sector more competitive.
While MTNGH has welcomed the move by the NCA to manage MTNGH's dominance it is seeking legal redress against certain measures by the NCA which it deems as procedural breaches.

Losses in three stocks outweighed gains in three stocks to push the year-to-date returns on the GSE-CI and GSE-FSI to -14.88% and -12.55% respectively.
Government raised funds in excess of its target with increase in yields at the 91 and 182-Day Bill maturities.

ECONOMIC SCOOP

Ghana’s GDP grew by 4.90% in the first quarter of 2020

The provisional real quarterly GDP growth rate was 4.90% as measured by the production approach, compared to 6.70% for the same period in 2019.
The Services sector recorded the highest growth rate of 9.50% in the quarter and also accounted for the biggest contribution to GDP at 48.30%.
In nominal terms at current prices, GDP was at GHS 92.49b at the end of the quarter as against GHS 84.85b at the end of Q1 2019.

GSE-FSI goes into double-digit loss for the first time in 2020 following price declines in four financial stocks.
The Government of Ghana (GoG) yield curve witnesses downward shift across the short tenor securities.

ECONOMIC SCOOP

Food inflation remains elevated as May inflation closes at 11.30%

Headline inflation rose to 11.30% in May compared to 10.60% in April 2020.
Food and non-alcoholic beverages prices was at 15.10% up from 14.40% in the prior month.
Non-food inflation also went up by 0.70% to close the month at 8.40%.
With the ongoing closure of Ghana’s borders imported inflation remains low at 4.80%, while local inflation was 14.10%.

The local bourse posted mixed performance during the week as the GSE-CI and GSE-FSI moved in opposite directions.
On the secondary Treasury market, the Government exceeded its auction target of GHS 875m as a total of GHS 921.23m was raised.

ECONOMIC SCOOP

Disbursement of Government’s GHS 600m COVID-19 stimulus package to MSMEs set to begin this week.

The National Board for Small Scale Industry (NBSSI) has revealed that about 200,000 applicants are expected to benefit from the programme.
The disbursement exercise is expected to close by 20^th June 2020.
The NBSSI also announced that another amount of GHS 90m secured together with the Mastercard Foundation is to be disbursed to selected beneficiaries when the GHS 600m package begins to deplete.

As the COVID-19 pandemic keeps ravaging economies around the globe, the Government lines up some relieve and stimulus programmes to ease the impact of the virus on the Ghanaian economy, including the USD 100 million(GHS 572 million equivalent) COVID-19 Preparedness and Response Plan to fight the pandemic and the Coronavirus Alleviation Programme (CAP) (estimated size of GHS 1.25 billion/USD 219 million) and COVID-19 National Trust Fund to help revive the economy.