Cedi Performance and Macro-Economic Indicators
At the close of the second quarter of 2021, the year-to-date (YTD) depreciation rates of the cedi against the US dollar, the British pound and Euro were 0.59%, 1.10% and 1.77%, respectively. The depreciation of the Ghana cedi to the major currencies during the quarter can be attributed to general recovery in developed countries due to reduction in the COVID-19 restrictions and increase in global economic activities.
At the end of the June 2021, the inflation rate stood at 7.8% compared to 10.3% at the end of March 2021. The non-food group trended downwards from 10.0% in March 2021 to 8.2% in June 2021. Food and non-alcoholic beverage group inflation also trended downwards from 10.8% in March 2021 to 7.3% in June 2021. The decline in inflation in both groups resulted in the drastic drop in inflation for June 2021.
The Bank of Ghana reduced the monetary policy rate from 14.50% to 13.50% due to the recent slowdown in inflation to a 14-month low of 7.5% in May 2021 on the back of lower food prices, a tight monetary policy stance and relatively stable exchange rate conditions.
The table below provides details of the rates and movement in the currency market.
Economic Review
| Q1 2021 | Q2 2021 | Change (YoY) | |
| Monetary Policy Rate | 14.50% | 13.50% | 1.00%  |
| Inflation Rate | 10.30% | 7.80% | 2.50% |
| Open (31st March, 2020) | Close (30th June, 2021) | Quarter Depreciation | |
| US Dollar to Ghana Cedi | 5.73 | 5.76 | 0.59%  |
| British Pound to Ghana Cedi | 7.87 | 7.96 | 1.10% |
| Euro to Ghana Cedi | 6.71 | 6.83 | 1.77% |
Government Borrowing
The 91-, 182- and 364-Day Treasury Bills began the second quarter of 2021 at 12.87%, 13.65% and 16.57%, respectively and decreased to 12.62%, 13.38% and 16.33%, respectively at the end of the quarter. On average, interest rates for the 91-Day, 182-Day and 364-Day T-bills were 12.75%, 13.51% and 16.42%, respectively. The government also issued a 5-Year and a 7-Year Bond at 18.80% and 18.10%, respectively. Compared to the first quarter 2021, with the exception of the 5-Year Treasury Bonds, interest rates of GoG securities at various maturities trended downwards.
The public debt issuance calendar for period covering April to June 2021 reveals government’s plans to issue cedi-denominated domestic debt securities amounting to GH₵21.43 billion from the domestic market. Of the targeted amount, GH₵17.30 billion will be used to rollover maturing domestic debts while the remaining GH₵4.13 billion would be fresh issuance geared towards government’s budgetary financing requirements. Short term securities (91-Day to 364-Day Treasury Bills) account for GH₵18.43 billion of the debt issuance, while longer term government debt securities (5-Year and 7-Year Treasury Bonds) account for GH₵3.00 billion of the issuance.
| Q2 2020 | Q2 2021 | Difference | |
| 91 Day T-bill | 14.07% | 12.75% | 1.32% |
| 182 Day T-Bill | 14.11% | 13.51% | 0.60% |
| 364 Day T-Bill | 16.86% | 16.42% | 0.44% |
| 5 Year T-Bond | 19.25% | 18.80% | 0.45% |
Stock Market Performance
The GSE Composite Index (GSE-CI) and GSE Financial Stock Index (GSE-FSI) closed the second quarter 2021 with a year to date (YTD) returns of 36.16% and 4.97%, respectively compared to 13.99% and 3.54% in March 2021. The improvement in the returns of the indices was due to price recoveries of some of the listed stocks, such as GGBL, MTN, EGL and FML.
MTN continued dominate trades and also pushed the GSE Composite Index upwards since the beginning of the year to end of the second quarter. This can be attributed to data and voice services by individuals and companies, as well as a growth in mobile money users and transactions. However, the banking sector faced challenges such as the directive from the Bank of Ghana which prohibits banks from charging certain fees and charges, the 5% financial sector clean-up levy on their gross profits affected their net income. These factors will negatively affect earnings of the banks, it is not surprising that the GSE Financial Stock Index had a return of 4.97% compared to the GSE Composite Index return of 36.16% by the end of June 2021.
During the quarter, there were 11 gainers. GGBL was the top gainer with a quarterly return of 43.33%, closing the quarter at GH₵1.29. MTNGH was the second largest gainer ending the quarter at GH₵1.20, which represented a 41.18% quarterly gain. The third gainer for the quarter was EGL which had a quarterly return of 25.0%. The other gainers were FML, GCB, SOGEGH, TOTAL, CAL, BOPP, GOIL and SCB which gained 22.94%, 20.00%, 20.00%, 15.87%, 9.37%, 8.50%, 2.65% and 2.48%, respectively. On the other hand, UNIL led the pack of 5 losers, ending the quarter at GH₵3.33, this represents a quarterly loss of 45.05%. EGH lost the least during the quarter, its price dropped by 2.78%, closing the quarter at GH₵7.00. Prices of 14 stocks remained flat.
The performance of the gainers and losers during the second quarter of 2021 on the GSE has been outlined in the tables below.
Gainers
| Share | Year High (GH₵) | Year Low (GH₵) | 31st Mar 2021 (GH₵) | 30th Jun 2021 (GH₵) | YTD Gain (%) | Quarter Gain (%) |
| GGBL | 1.29 | 0.90 | 0.90 | 1.29 | 43.33% | 43.33%  |
| MTNGH | 1.26 | 0.64 | 0.85 | 1.20 | 87.50% | 41.18% |
| EGL | 1.80 | 1.40 | 1.44 | 1.80 | 28.57% | 25.00% |
| FML | 1.34 | 1.08 | 1.09 | 1.34 | 24.07% | 22.94% |
| GCB | 5.40 | 4.05 | 4.50 | 5.40 | 33.33% | 20.00% |
| SOGEGH | 0.90 | 0.64 | 0.75 | 0.90 | 40.63% | 20.00% |
| TOTAL | 3.65 | 2.83 | 3.15 | 3.65 | 28.98% | 15.87% |
| CAL | 0.84 | 0.60 | 0.64 | 0.70 | 1.45% | 9.37% |
| BOPP | 2.17 | 2.00 | 2.00 | 2.17 | 8.50% | 8.50% |
| GOIL | 1.55 | 1.50 | 1.51 | 1.55 | 3.33% | 2.65% |
| SCB | 18.60 | 16.31 | 18.15 | 18.60 | 14.04% | 2.48% |
Losers
| Share | Year HHigh | Year Low | 31st Mar 2021 | 30th June 2021 | YTD Loss (%) | Quarter Loss (%) |
| UNIL | 8.29 | 3.07 | 6.06 | 3.33 | 59.83% | 45.05% |
| ETI | 0.08 | 0.05 | 0.07 | 0.05 | 37.50% | 28.57% |
| ACCESS | 4.39 | 3.49 | 4.30 | 3.49 | 20.50% | 18.84% |
| SIC | 0.08 | 0.07 | 0.08 | 0.07 | 12.50% | 12.50% |
| EGH | 7.20 | 7.00 | 7.20 | 7.00 | 2.78% | 2.78% |
Developments in the Capital Market
Mechanical Lloyd Plc. (MLC) finally delisted on the 16th April, 2021 and hence there are currently 30 companies listed on the official list of the GSE.
Enterprise Group PLC (EGL) has entered into an agreement to fully acquire Acacia Health Insurance Limited a major private health insurance service provider. With the addition of health insurance to the company’s portfolio, EGL seeks to make an even greater contribution to the insurance industry and look forward to offering their services to a wider segment of the market. The transaction is however subject to regulatory approval.
Ecobank Transnational Incorporated (ETI) successfully raised US$350 million Tier 2 Sustainability Notes. This is the first ever Tier 2 Sustainability Notes issued by a financial institution in Sub-Saharan Africa and will be listed on the main market of the London Stock Exchange. The bond, which matures in June 2031, has a call option in June 2026 and was issued with a coupon of 8.75% with interest payable semi-annually.
Current Economic Environment and Investment Implications
The cedi is likely to further depreciate mainly due to the re-opening of the developed economies. On the capital market, the GSE Composite is expected to trend upwards during the next quarter mainly as a result of the upward movement in the price of MTN. Yields on newly issued fixed income securities will be relatively stable as no significant change is expected in interest rate movements. The Ghana Fixed Income Market presents buying opportunities for investors interested in secondary market securities with higher yields in order to maximise their returns.
