Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Tourist arrivals up 24.8% y/y in September 2017

Total international arrivals to Georgia increased 20.9% y/y to 0.76mn visitors in September 2017, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 24.8% y/y to 0.38mn persons (49.9% of total) in September after posting a 27.2% y/y growth in August 2017. Out of top countries by arrivals, in September 2017, visitors continued to increase from Armenia (+11.8% y/y), Russia (+32.0% y/y), Iran (+80.0% y/y), Azerbaijan (+15.6% y/y), and Ukraine (+0.2% y/y). Arrivals from EU were up 28.0% y/y to over 42,200 visitors. In 9M17 international arrivals increased 19.2% y/y to 5.8mn visitors, while tourist arrivals increased 28.8% y/y to 2.8mn.

Inflation was up 6.2% y/y and up 0.7% m/m in September 2017

The annual CPI inflation retreated to 6.2% in September 2017 from 5.7% inflation in previous month, according to GeoStat. Core inflation was 4.5% in September, up from 4.3% in previous month. Overall price changes were driven by price increases in food and non-alcoholic beverages (+6.5% y/y, +1.96ppts), transport (+14.7% y/y, +1.84ppts), and alcoholic beverages and tobacco (+17.4% y/y, +1.13ppts) categories. On a monthly basis, there was 0.7% inflation in September 2017. Price increase in food and non-alcoholic beverages (+1.2% m/m, +0.36ppts) and transport (+1.8% m/m, +0.25ppts) categories were the major drivers of monthly Inflation dynamics.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.3% yield, trading at 103.3 (-0.1% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (unchanged w/w), yielding 11.0%. GOGC Eurobonds (GEOROG) were trading at 106.3 (+0.2% w/w), yielding 4.8%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.5 (unchanged w/w), yielding 5.0%.
Georgian Sovereign Eurobonds (GEORG) closed at 112.4 (unchanged w/w) at 3.1% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 33.71/share (+3.40% w/w and +1.32% m/m). More than 286k shares traded in the range of GBP 32.18 – 33.84/share. Average daily traded volume was 55k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 1.44% w/w and gained 2.59% m/m. The volume of BGEO shares traded was at 0.73% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.79 (+1.14% w/w and +1.76% m/m). More than 85k shares changed hands in the range of GBP 16.17 – 17.17 share. Averaged daily traded volume was 31k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.95/share (unchanged w/w and -15.23% m/m). More than 155k shares were traded in the range of GBP 2.90 – 3.08/share. Average daily traded volume was 44k in the last 4 weeks. The volume of GHG shares traded was at 0.07% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 970mn (US$ 392.9mn).

Ministry of Finance Treasury Bills:

1-year GEL 30.0mn (US$ 12.1mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on October 4, 2017. The weighted average yield was fixed at 7.129%. The nearest treasury security auction is scheduled for October 11, 2017, where GEL 20.0mn nominal value 2-year T-Notes and GEL 20.0mn nominal value 182-days T-Bills will be sold.