Ghana Market Update - Cal Asset Management Company Ltd.

Investment Climate Brief 28th Sep - 2nd Oct '20

The GSE-CI and GSE-FSI continued their poor run of performance with declines of 6.91 points and 12.58 points respectively, closing the week with year-to-date returns of -18.73% and -17.97%.
Government exceeded its target for last week's auction by 12.38%, with 3bps increase in yields on the 91 and 182-Day Bills.

ECONOMIC SCOOP

Ghana’s debt stock increases by 1.66% between July 2020 and August 2020, while imports and exports tumble

According to the latest Economic and Financial Data Report, Ghana’s debt stock rose from GHS 258.8 billion in July 2020 to GHS 263.10 billion in August 2020, increasing the debt-to-GDP ratio from 67.20% to 68.30%.
The external component of the total debt stands at GHS 138 billion, with the domestic debt level at GHS 125.10 billion.
The total cumulative value of imports and exports declined from GHS 9,149.60 million and GHS 10,570.60 at August 2019 to GHS million 8,304.30 million and GHS 9,622.30 million respectively.

Bank of Ghana to announce the Policy Rate today

This follows the conclusion of the 96^th Monetary Policy Committee meeting which was held from 22^nd to 25^th September 2020.
We expect the Policy Rate to be maintained at 14.50% as the Central Bank looks to create an enabling environment to spur economic activity.

There was some respite on the local bourse at the close of trading last week as the GSE-CI and GSE-FSI closed with gains of 13.58 and 3.40 points respectively.
Government could only raise GHS 1,797.45m out of the GHS 2,504.00m it sought to raise at last week’s auction, falling short of its target by 28.22%.

ECONOMIC SCOOP

Ghana’s economy contracts by 3.20% in the second quarter of 2020

The latest release by the Ghana Statistical Service shows that Ghana’s economy contracted by 3.20% in Q2 2020 as against growth of 5.70% in Q2 2019.
The Industry and Services sectors recorded contractions of 5.70% and 2.60% respectively, while the Agriculture sector recorded growth of 2.50%.
The impact of the restrictive measures put in place to stop the spread of COVID-19 was telling for the Hotel & Restaurants sub-sector which contracted by 79.40%.
On the other hand, the Information & Communication sub-sector expanded by 74.20% in Q2 2020.

Monetary Policy Committee (MPC) to commence its 96^th meeting today

The MPC of the BoG is scheduled to start its monetary policy meeting today Tuesday 22^nd September 2020 and conclude on Friday 25^th September 2020.
The Committee will subsequently announce its decision on Monday 28^th September 2020.
We expect the Policy Rate to be maintained at 14.50% as the Central Bank looks to create an enabling environment to spur economic activity.

There was mixed performance on the local bourse at the end of last week's trading session. While the GSE-CI lost -0.43% over the week, the GSE-FSI recorded an uptick of 0.29%.
On the secondary market, Government raised a total of GHS 806.94m from 91 and 182-Day Bill issuances, exceeding its target amount of GHS 577.00m.

ECONOMIC SCOOP

Government to announce bailout package for clients of defunct Fund Management

Over the weekend, the Securities and Exchange Commission (SEC) announced that the government was expected to announce a bailout package for 53 bankrupt Fund Management Companies (FMCs) clients.
According to SEC, the package will be issued in phases with the first phase covering customers of the twenty-two (22) firms currently under official liquidation.
A statement released by the Securities and Exchanges Commission ( SEC) clarified that, the Official Liquidator, the Registrar General, will disclose information of the payment process to affected clients in September 2020.

CPC ended the week as the sole gainer on the GSE with a week-on-week gain of 50%, while FML and UNIL recorded price declines of -15.45% and -9.96% respectively. The GSE-CI shed 6.97 points to close at 1,840.07 points. With no price change in financial stocks, the GSE-FSI stayed flat at 1,687.40 points.
The Government raised an amount of GHS 1,026.57m from last week’s 91, 182 and 364-Day Bills auction, thus missing its target of GHS 1,041.00m by 1.39%.

ECONOMIC SCOOP

Registrar-General to commences liquidation of collapsed Fund Management Companies

The Registrar-General and Liquidator for the collapsed Fund Management Companies has started formal procedures to liquidate 20 out of 53 firms whose licenses had been revoked by the Securities and Exchange Commission (SEC) in November 2019.
The liquidator has assured that payment to the customers in the first phase will commence before the end of September 2020.

Government of Ghana releases its Issuance Calendar for September to November 2020

For the period, Government plans to issue a gross amount of GH¢22,727.87 million, of which GH¢19,677.65 million is to rollover maturities and the remaining GH¢3,050.22 million is fresh issuance to meet Government’s financing requirements
Issuance of the 20-year bond as a shelf offering will be re-opened based on investors request and on market conditions
Consistent with the Medium-Term Debt Management Strategy, government may announce tap-ins/reopening of other existing instruments depending on market conditions.

The two major indices on the local bourse, the GSE-CI and GSE-FSI, recorded slides of 21.47 points and 42.71 points to close at 1,854.94 points and 1,682.50 points respectively.
Government was able to fill only GHS 807.31m (71%) of its intended target of GHS 1,137m from the issuance of 91 and 182-Day Bills.

ECONOMIC SCOOP

Producer Price Index (PPI) drops to 9.30% in July 2020

PPI for July 2020 was at 9.30%, 0.20% below the previous month’s figure of 9.50%.
Inflation in the Mining and Quarrying sub-sector increased by 3% to settle at 38.20%.
The Manufacturing sub-sector which accounts for two-thirds of the PPI posted moderate inflation of 4.40%, up from 3.80% in June 2020.
The Utility sub-sector saw a sharp decline in inflation from 12.00% in June 2020 to 5.80% in July 2020.

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