Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Money  transfers up 25.3% y/y in August 2016

In August 2016, money transfers increased 25.3% y/y to US$ 105.8mn after growing 10.4% y/y in previous month, according to NBG. Reduced remittances from Russia (-1.6% y/y, 34.9% of total), was the only major country negatively affecting growth of remittances. While, money transfers were up from all other major remitting countries: USA (+36.6% y/y), Italy (+18.2% y/y), Greece (up 8X y/y due to last year’s low base), Turkey (+32.9% y/y), and Israel (+97.0% y/y). Overall, money transfers were up 2.4% y/y to US$ 731.8mn in 8M16.

Trade deficit down 0.7% y/y in 8M16, excluding one-offs

In August 2016, imports increased 9.5% y/y to US$ 684mn, exports were flat at US$ 190mn, and the trade deficit widened 13.7% y/y to US$ 493mn, according to GeoStat’s preliminary figures. In 8M16, the trade deficit was down 0.7% y/y to US$ 3.24bn, excluding one-offs. Detailed foreign trade statistics will be available on September 19, 2016.

Producer price index down 3.4% y/y and up 0.04% m/m in August 2016

PPI for industrial goods increased 0.04% m/m in August 2016, according to GeoStat. A 0.2% price increase for manufacturing contributed the most to the overall index change. In this section prices were up for manufacture of food products, beverages and tobacco (+1.9% m/m) while prices were down for manufacture of basic and fabricated metals (-5.0% m/m). Prices were also down for mining and quarrying (-3.1% m/m).

Annual PPI was down 3.4% in August 2016. Falling prices in manufacturing contributed the most to the overall index change (-5.7% y/y, -4.72ppts) as prices were down for manufacture of basic and fabricated metals (-15.3% y/y), and manufacture of chemical products (-18.8% y/y). Meanwhile, supply of electricity, gas and water prices were up 12.0% y/y.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (BGEOLN) closed at 5.4% yield, trading at 103.4 (+0.1% w/w). GOGC’s Eurobonds (GEOROG 05/17) were trading at 101.9 (unchanged w/w), yielding 3.9% and (GEOROG 04/21) were trading at 105.6 (-0.1% w/w), yielding 5.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 113.4 (+0.3% w/w), yielding 5.1%. Georgian Sovereign Eurobonds (GEORG) closed at 112.2 (-0.3% w/w) at 3.9% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.62/share (-2.69% w/w and +0.03% m/m). More than 230k shares traded in the range of GBP 28.55 – 30.48/share. Average daily traded volume was 51k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 0.53% w/w and lost 0.72% m/m. The volume of BGEO shares traded was at 0.58% of its capitalization. 

 TBC Bank Group (TBCG LN) closed the week at GBP 11.25 (+2.27% w/w and -3.43% m/m). More than 752k shares changed hands in the range of GBP 10.75 – 11.50/share. 

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.07/share (+4.96% w/w and -0.24% m/m). More than 154k shares were traded in the range of GBP 2.93 – 3.07/share. Average daily traded volume was 29k in the last 4 weeks. The volume of GHG shares traded was at 0.12% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 800mn (US$ 346.2mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.7mn) certificates of deposit, with an average yield of 6.45% (down 10bps from previous issue).

Ministry of Finance Treasury Notes: 2-year GEL 10mn (US$ 4.3mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on September 7, 2016. The weighted average yield was fixed at 6.871%. The nearest treasury securities auction is scheduled for September 21, 2016, where GEL 10mn nominal value 5-year T-Notes will be sold.