Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

FDI up 17.6% y/y in 3Q17

FDI in Georgia stood at US$ 594.5mn (+17.6% y/y) in 3Q17, according to GeoStat’s preliminary figures. Similar to previous quarters, the transport and communications sector was the largest FDI recipient at US$ 177.8mn (-13.5% y/y, 29.9% of total) in 3Q17, followed by the construction at US$ 116.2mn (+85.6 y/y, 19.5% of total). Azerbaijan topped the list of investors with US$ 154.1mn, followed by Turkey with US$ 138.6mn and UK with US$ 63.4mn.

Exports up 8.2% y/y in November 2017

In November 2017, exports increased 8.2% y/y to US$ 236.7mn, imports were up 16.9% y/y to US$ 757.7mn and the trade deficit widened 21.4% y/y to US$ 521.0mn according to GeoStat’s preliminary figures. In 11M17, trade deficit was up 1.2% to US$ 4.7bn as exports increased 27.0% y/y to US$ 2.4bn, while imports were up 8.8% y/y to US$ 7.1bn. Detailed foreign trade statistics will be available on December 19, 2017.

Money transfers up 24.8% y/y in November 2017

In November 2017, money transfers increased 24.8% y/y to US$ 122.1mn after growing 20.0% y/y in previous month, according to NBG. Money transfers were up from all major remitting countries: Russia (+10.4% y/y, 32.1% of total), Italy (+29.3% y/y, 10.5% of total), Greece (+47.3% y/y, 10.2% of total), USA (+11.7% y/y, 9.5% of total), Israel (+93.6% y/y, 9.4% of total) and Turkey (+17.1% y/y, 7.8% of total). In 11M17 money transfers were up 20.2% y/y to US$ 1.2bn.

NBG Increases its policy rate to 7.25%

At its meeting on 13 December 2017, NBG’s monetary policy committee decided to increase its policy rate by 0.25 percentage points to 7.25%. According to NBG, the nominal effective exchange rate depreciated significantly following its last monetary policy meeting on October 25. This increased the pressure on prices and inflation came in at 6.9% in November. The regulator noted that decision on further tightening of the monetary policy as well as its duration would depend on the reduction of the exchange rate-related pressure on prices. NBG anticipates that the inflation will start declining with the expiration of one-off factors in the beginning of 2018. The next committee meeting is scheduled for 31 January 2018.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.0% yield, trading at 104.6 (+0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.8%. GOGC Eurobonds (GEOROG) were trading at 107.7 (unchanged w/w), yielding 4.3%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 112.4 (-0.1% w/w), yielding 4.7%.

Georgian Sovereign Eurobonds (GEORG) closed at 112.4 (unchanged w/w) at 2.9% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 34.74/share (+3.52% w/w and +4.07% m/m). More than 244k shares traded in the range of GBP 33.24 – 34.91/share. Average daily traded volume was 58k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.16% w/w and lost 1.68% m/m. The volume of BGEO shares traded was at 0.62% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.43 (+0.86% w/w and -2.78% m/m). More than 98k shares changed hands in the range of GBP 16.07 – 16.80 share. Averaged daily traded volume was 25k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.40/share (-2.86% w/w and +1.68% m/m). More than 57k shares were traded in the range of GBP 3.40 – 3.50/share. Average daily traded volume was 11k in the last 4 weeks. The volume of GHG shares traded was at 0.04% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,150mn (US$ 446.2mn).

Ministry of Finance Treasury Bills:

182-days GEL 20.0mn (US$ 7.6mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on December 13, 2017. The weighted average yield was fixed at 7.045%. The nearest treasury security auction is scheduled for December 27, 2017, where GEL 12.0mn nominal value 5-year T-Notes will be sold.