Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

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

In August 2016, exports were flat y/y at US$ 190mn, imports were up 9.5% y/y to US$ 684mn, and the trade deficit was up 13.7% y/y to US$ 493mn according to GeoStat. Reduced ferro-alloys exports (-40.6% y/y) and nuts exports (-31.6% y/y) were the major commodities negatively weighing on exports in August 2016, while copper ores (+45.9% y/y), cars (+18.1% y/y), and wine (+33.5% y/y) posted increases.

Petroleum (-30.5% y/y), cars (+14.3% y/y), copper ores (+76.0% y/y), pharmaceuticals (-2.2% y/y), and telephones (+37.5% y/y) represented the top 5 imported commodities in August 2016.

In 8M16, trade deficit was down 0.7% y/y to US$ 3.24bn, excluding one-offs, as imports were down 3.6% y/y to US$ 4.55bn and exports fell 10.0% y/y to US$ 1.31bn.

Last week, NBG intervened on the FX market and sold US$ 20mn. GEL weakened 0.2% w/w and strengthened 3.3% YTD against the US$.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (BGEOLN) closed at 5.3% yield, trading at 103.9 (+0.6% w/w). GOGC’s Eurobonds (GEOROG 04/21) were trading at 106.1 (+0.5% w/w), yielding 5.2%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 113.7 (+0.6% w/w), yielding 5.0%. 

Georgian Sovereign Eurobonds (GEORG) closed at 112.1 (unchanged w/w) at 3.9% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.49/share (-0.44% w/w and +5.66% m/m). More than 300k shares traded in the range of GBP 29.23 – 30.65/share. Average daily traded volume was 55k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BGEO is a constituent, grew 0.46% w/w and lost 0.27% m/m. The volume of BGEO shares traded was at 0.76% of its capitalization. 

 TBC Bank Group (TBCG LN) closed the week at GBP 11.75 (+4.44% w/w and +5.62% m/m). More than 1.3mn shares changed hands in the range of GBP 11.00 – 11.75/share. 

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.175/share (+3.50% w/w and +15.45% m/m). More than 69k shares were traded in the range of GBP 3.04 – 3.15/share. Average daily traded volume was 28k in the last 4 weeks. The volume of GHG shares traded was at 0.6% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 950mn (US$ 409.8mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 8.6mn) certificates of deposit, with an average yield of 6.58% (up 1bps from previous issue).

Ministry of Finance Treasury Notes: 5-year GEL 10mn (US$ 4.3mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on September 21, 2016. The weighted average yield was fixed at 7.555%.