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 4.0% y/y in June 2018
Georgia’s economy grew by 4.0% y/y in June 2018 after growing 7.5% y/y in previous month, according to GeoStat’s rapid estimates.

In June 2018, the growth was posted in transport, hotels and restaurants, financial intermediation and trade sectors. Overall, real GDP growth was 5.7% y/y in 1H18. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Inflation was 2.8% y/y and -0.3% m/m in July 2018

Annual CPI inflation was 2.8% in July 2018 up from 2.2% in June 2018, according to GeoStat. Core inflation was down to 1.4% from 1.6% in previous month. Annual price changes were driven by price increases in transport (+6.9% y/y, +0.93ppts), food and non-alcoholic beverages (+2.3% y/y, +0.67ppts), housing, water, electricity and gas (+5.2% y/y, +0.43ppts) and healthcare (+5.0% y/y, +0.42ppts) categories. On a monthly basis, there was 0.3% deflation in July 2018. Price decrease in food and non-alcoholic beverages (-1.1% m/m, -0.32ppts) was the major driver of monthly inflation dynamics.

Tourist arrivals up 15.0% y/y in July 2018

Total international visitors to Georgia increased 10.7% y/y to 0.85mn visitors in July 2018, according to the Ministry of Internal Affairs. A 15.0% y/y growth in tourist arrivals (0.57mn trips, 66.8% of total) drove the international visitors’ growth. Out of top countries by visitors, in July 2018, international visitors continued to increase from Russia (+13.8% y/y), Azerbaijan (+9.8% y/y) and Turkey (+20.5% y/y), while visitors were down from Armenia (-4.2% y/y) and Iran (-9.5% y/y).

NBG purchased US$ 17.5mn

On August 1, 2018, the NBG intervened on the FX market and purchased US$ 17.5mn to curb the GEL’s appreciation and build reserves. YTD, the NBG purchased US$ 87.5mn and the GEL strengthened 5.6% against the USD.


Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.0% yield, trading at 100.0 (-0.1% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. Georgia Capital Eurobonds (GEOCAP) were trading at 94.3 (-0.1% w/w), yielding 7.4%.

GOGC Eurobonds (GEOROG) were trading at 101.7 (unchanged w/w), yielding 6.1%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 106.6 (+0.2% w/w), yielding 5.9%.
Georgian Sovereign Eurobonds (GEORG) closed at 106.6 (-0.2% w/w) at 4.2% yield to maturity. Georgia Eurobonds, YTM (%)


Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 17.55/share (-3.33% w/w and -6.10% m/m). More than 291k shares traded in the range of GBP 17.43 – 18.62/share. Average daily traded volume was 63k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 1.12% w/w and lost 0.14% m/m. The volume of BGEO shares traded was at 0.59% of its capitalization.


Georgia Capital (CGEO LN) shares closed at GBP 9.95/share (-0.51% w/w and -3.03% m/m). More than 933k shares traded in the range of GBP 9.60 – 10.08/share. Average daily traded volume was 121k in the last 4 weeks. The volume of CGEO shares traded was at 2.43% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.46 (+2.71% w/w and -0.11% m/m). More than 155k shares changed hands in the range of GBP 16.80 – 17.78/share. Average daily traded volume was 23k in the last 4 weeks. The volume of TBCG shares traded was at 0.29% of its capitalization.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.49/share (+2.90% w/w and +2.31% m/m). More than 386k shares were traded in the range of GBP 2.49 – 2.66/share. Average daily traded volume was 32k in the last 4 weeks. The volume of GHG shares traded was at 0.29% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 790mn (US$ 322.7mn).

Ministry of Finance Treasury Bills:
1-year GEL 40.0mn (US$ 16.3mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on August 1, 2018. The weighted average yield was fixed at 7.115%.