Weekly Market Watch by Galt&Taggart

Weekly Market Watch by Galt&Taggart

The FINANCIAL -- Economy

Trade deficit down 7.8% y/y excluding one-offs in 5M16

In May 2016, exports decreased 11.6% y/y to US$ 172.3mn, imports were up 8.1% y/y to US$ 608.6mn (excluding one-offs), and the trade deficit was up 18.5% y/y to US$ 436.3mn, according to GeoStat. Reduced copper ore exports (-30.7% y/y) and car re-exports (-5.7% y/y) were the major commodities weighing on export growth in May 2016, while ferro-alloys (+59.7% y/y), nuts (+52.6% y/y), pharmaceuticals (+19.9% y/y), and gold (+29.0% y/y) posted increases. 

Petroleum (-11.3% y/y), cars (+2.3% y/y), pharmaceuticals (+1.3% y/y, excluding one-offs), gases (-38.8% y/y), and telephones (+55.9% y/y) represented the top 5 imported commodities in May 2016.

In 5M16, the trade deficit is down 7.8% y/y to US$ 1.87bn, excluding one-offs, as imports fell 9.0% y/y to US$ 2.64bn and exports fell 11.7% y/y to US$ 780.4mn.

BGEO Group PLC announces the purchase of the remaining 75% stake in GGU

BGEO group PLC announces that JSC BGEO Investments, a wholly owned subsidiary of BGEO, has signed a Share Purchase Agreement, to acquire a 75% equity stake in Georgian Global Utilities Limited (GGU) on 23 June, 2016. As a result of this buy-out, the Group will own 100% of GGU. The transaction values GGU’s enterprise value at GEL 287.5mn.

EBRD issued its first public bond on the Georgian Stock Exchange

The European Bank for Reconstruction and Development (EBRD) issued its first public bond on the Georgian Stock Exchange in the amount of GEL 107mn on 17 June, 2016. The five-year issuance has a floating rate coupon linked to the three-month Certificate of Deposit (CD) issued by the National Bank of Georgia, with the initial three-month coupon set at 6.45%, following the NBG’s CD auction. This is the EBRD’s third successful bond issuance in Georgian lari managed by JSC Galt & Taggart.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (GEBGG) closed at 4.0% yield, trading at 103.7 (-0.1% w/w). GOGC Eurobonds (GEOROG) were trading at 101.8 (-0.3% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.6 (+0.1% w/w), yielding 5.7%. Georgian Sovereign Eurobonds (GEORG) closed at 109.9 (-0.5% w/w) at 4.5% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 24.50/share (-2.08% w/w and -2.00% m/m). More than 453k shares traded in the range of GBP 23.11 – 26.79/share. Average daily traded volume was 85k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BOGH is a constituent, declined 2.00% w/w and lost 6.08% m/m, respectively. The volume of BOGH shares traded was at 1.15% of its capitalization. 

TBC Bank (TBCB LI) closed the week at US$ 12.60 (-3.08% w/w and +5.00% m/m). More than 32k GDRs changed hands in the range of US$ 12.60 – 13.50/GDR. Average daily traded volume was 53k in the last 4 weeks, less than in the previous month.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.75/share (-3.34% w/w and +11.66% m/m). More than 149k shares were traded in the range of GBP 2.70 – 2.95/share. Average daily traded volume was 80k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 250mn (US$ 112.4mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 9.4mn) certificates of deposit, with an average yield of 6.45% (down 105bps from previous issue).

Ministry of Finance Treasury Notes: 5-year GEL 10.0mn (US$ 4.7mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on June 15, 2016. The weighted average yield was fixed at 9.392%. The nearest treasury securities auction is scheduled for June 29, 2016, where GEL 25mn nominal value 1-year T-Bills will be sold.