Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Real GDP growth was 4.4% y/y in January 2018

Georgia’s economy expanded 4.4% y/y in January 2018, according to GeoStat’s rapid estimates. In January 2018, the growth was recorded in manufacturing, social and personal services, construction, trade and hotels and restaurants. While growth was down in other business activities, transport and electricity, gas and water supply sectors. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Inflation was 2.7% y/y and 0.2% m/m in February 2018

The annual CPI inflation retreated to 2.7% in January 2018 from 4.3% inflation in previous month, according to GeoStat. Core inflation was also down to 1.7% in February from 3.0% in previous month. Annual price changes were driven by price increases in food and non-alcoholic beverages (+3.4% y/y, +1.04ppts), alcoholic beverages and tobacco (+7.4% y/y, +0.49ppts) and transport (+2.9% y/y, +0.41ppts) categories. On a monthly basis, there was 0.2% inflation in February 2018. Price increases in food and non-alcoholic beverages (+0.4% m/m, +0.13ppts), hotels and restaurants (+2.1% m/m, +0.09ppts) and alcoholic beverages and tobacco (+1.2% m/m, +0.08ppts) categories were the major drivers of monthly Inflation dynamics.

NPLs at 2.9% in January 2018

In January 2018, the banking sector loan portfolio increased 19.6% y/y after growing 16.4% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 14.2% y/y and down -1.9% m/m to GEL 21.9bn (US$ 8.8bn). Deposits were up 17.9% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 11.6% y/y and down-3.2% m/m to GEL 19.2bn (US$ 7.7bn). Deposit dollarization reached 64.4% (-7.5ppts y/y and -1.2ppts m/m). NPLs stood at 2.9% in January 2018 (-0.9ppts y/y and +0.1ppts m/m).

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.3% yield, trading at 103.3 (-0.8% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. GOGC Eurobonds (GEOROG) were trading at 105.4 (-0.5% w/w), yielding 4.9%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.5 (-0.3% w/w), yielding 5.0%.

Georgian Sovereign Eurobonds (GEORG) closed at 109.4 (-0.2% w/w) at 3.6% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 34.26/share (+3.44% w/w and -6.80% m/m). More than 708k shares traded in the range of GBP 32.98 – 34.16/share. Average daily traded volume was 91k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 2.19% w/w and lost 2.99% m/m. The volume of BGEO shares traded was at 1.80% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.20 (-2.72% w/w and -1.46% m/m). More than 315k shares changed hands in the range of GBP 15.42 – 16.80 share. Averaged daily traded volume was 26k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.30/share (-1.64% w/w and -1.49% m/m). More than 52k shares were traded in the range of GBP 3.28 – 3.40/share. Average daily traded volume was 8k 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 890.0mn (US$ 360.4mn).

Ministry of Finance Treasury Notes:

The nearest treasury security auction is scheduled for March 7, 2018, where GEL 40.0mn nominal value 1-year T-Bills will be sold.