Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Money transfers up 14.8% y/y in November 2016 

In November 2016, money transfers increased 14.8% y/y to US$ 97.8mn after growing 14.0% y/y in previous month, according to NBG. From major remitting countries, money transfers were up from Russia (+6.2% y/y, 36.2% of total), USA (+25.8% y/y, 10.6% of total), Italy (+15.8% y/y, 10.2% of total), Turkey (+63.6% y/y, 8.3% of total) and Israel (+88.7% y/y, 6.1% of total), while transfers were down from Greece (-2.4% y/y, 8.7% of total). Overall, money transfers were up 5.5% y/y to US$ 1.03bn in 11M16.

Exports up 16.8% y/y in November 2016

In November 2016, exports increased 16.8% y/y to US$ 218.7mn and imports increased 12.8% y/y to US$ 649.6mn, resulting trade deficit to widen 10.9% y/y to US$ 430.9mn, according to GeoStat’s preliminary figures. In 11M16, the trade deficit was up 1.2% y/y reaching US$ 4.59bn, excluding one-offs. Detailed foreign trade statistics will be available on December 19, 2016.

NBG keeps its policy rate unchanged at 6.5%

At its meeting on 14 December 2016, NBG’s monetary policy committee decided to keep the policy rate unchanged at 6.5%. NBG cited that one-off increase of prices is expected due to the transmission of external shocks and the scheduled increase of excise taxes, but these factors will have a short-term effect on inflation rate due to the decrease of inflation expectations. Georgia’s annual inflation stood at 0.2% in November, far below the regulator’s 2016 target of 5%, with weak aggregate demand along with reduced prices on commodities on international markets being one of the main reasons behind the low inflation rate. The next committee meeting is scheduled for January 25, 2017.

Producer price index up 2.8% m/m and up 1.7% y/y in November 2016 

PPI for industrial goods increased 2.8% m/m in November 2016, according to GeoStat. A 3.1% price increase for manufacturing contributed the most to the overall index change. In this section prices were up for manufacture of basic and fabricated metals (+8.4% m/m) and up for manufacture of food products, beverages and tobacco (+2.2% m/m). Prices were also up for mining and quarrying (+8.4% m/m). 

Annual PPI was up 1.7% in November 2016. Rising prices in manufacturing contributed the most to the overall index change (+0.9% y/y,) as prices were up for manufacture of food products, beverages and tobacco (+5.6% y/y) and basic and fabricated metals (+4.7% y/y). Meanwhile, supply of electricity, gas and water prices were up 4.9% y/y.

Property registration up 33.1% y/y in November 2016 

Property registration (commercial and residential real estate) increased 33.1% y/y (+2.4% m/m), reaching 58,721 units in November 2016, according to the National Agency of Public Registry. Registration increased for primary (+73.9% y/y, 24.5% of total), as well as secondary (+23.7% y/y, 75.5% of total) properties. 

Company registration up 16.6% y/y in November 2016 

In November 2016, company registration increased 16.6% y/y (+9.6% m/m) to 4,197 units, according to National Agency of Public Registry. Out of newly registered companies, 95.3% were business legal entities, while 4.7% comprised non-entrepreneurial (non-commercial) legal entities.

Fitch Ratings has affirmed Georgian Water and Power’s (GWP) rating at BB-, outlook stable. This rating reflects the company's natural monopoly position in Tbilisi's water supply and sanitation sector. The ratings are supported by low sector risk, solid profitability, low leverage and good receivables collection rates. 

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 6.0% yield, trading at 100.2 (+0.3% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.9 (unchanged w/w), yielding 4.6% and GEOROG 04/21 traded at 104.0 (-0.1% w/w), yielding 5.7%. Georgian Railway Eurobond (GRAIL) traded at a premium at 106.9 (unchanged w/w), yielding 6.3%. 

Georgian Sovereign Eurobond (GEORG) closed at 109.1 (+0.2% w/w) at 4.5% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 31.33/share (-7.28% w/w and +11.89% m/m). More than 565k shares traded in the range of GBP 30.82 – 33.57/share. Average daily traded volume was 104k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 0.04% w/w and gained 1.45% m/m. The volume of BGEO shares traded was at 1.43% of its capitalization. 

TBC Bank Group (TBCG LN) closed the week at GBP 15.44 (+2.93% w/w and +18.13% m/m). More than 1,596k shares changed hands in the range of GBP 14.79 – 15.44/share. Averaged daily traded volume was 167k in the last 4 weeks.  

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.73/share (-0.53% w/w and +5.07% m/m). More than 94k shares were traded in the range of GBP 3.70 – 3.88/share.  Average daily traded volume was 13k 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 1,350mn (US$ 507.4mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 7.5mn) certificates of deposit, with an average yield of 6.97% (up by 10bps from previous issue).

Ministry of Finance Treasury Notes: 2-year GEL 30.0mn (US$ 11.6mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on December 7, 2016. The weighted average yield was fixed at 7.884%.