Ghana Market Update - Cal Asset Management Company Ltd.

Investment Climate Brief 13th - 17th Jul '20

Losses in four stocks spurred declines of -0.79% and -0.32% in the GSE-CI and GSE-FSI.
Government is expected to seek long-term funding with the issuance of a new 6-Year Bond this week. Book building will commence on Wednesday 15th July 2020.

ECONOMIC SCOOP

African Sovereigns to experience long-lasting economic, financial and social threat post COVID-19 – Moody’s

International Rating Agency, Moody’s expects African countries to see a slow pace of recovery in the aftermath of the Coronavirus pandemic following border closures and broader lockdown measures which have slowed economic activities.
Another consideration was the fall in revenues from the economic slowdown, as against a rise in healthcare spending, which is expected to lead to widening fiscal deficits and increase in borrowing requirements.
Moody’s singled out countries like Mozambique, Zambia and Ghana to possibly face liquidity stress for the rest of the year, on the back of a negative outlook and elevated credit risk.

There was mixed results on the local bourse as the GSE-CI posted gain of 0.79% while the GSE-FSI suffered a decline of -0.80%.
Government raised a total of GHS 534.16m, exceeding its target amount of GHS 484.00m by 10.36%.

ECONOMIC SCOOP

IMF forecasts Sub-Saharan Africa’s economy to shrink by 3.20% in 2020

The International Monetary Fund (IMF) has revised its growth forecast for Sub-Saharan African downward from its earlier projected contraction of 1.60% to 3.20% contraction.
This new projection comes on the back of revised global economic contraction of -4.90% as a result of the economic fallout of the COVID-19 pandemic
However, the IMF expects economic growth in the region to rebound to 3.40% in 2021 following continued easing of restrictions across the region.

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.

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.

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%.

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