Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Money transfers up 13.1% y/y in September 2016 

In September 2016, money transfers increased 13.1% y/y to US$ 100.2mn after growing 25.3% y/y in previous month, according to NBG. From major remitting countries, money transfers were down only from Russia (-4.9% y/y, 34.9% of total), however strong growth of remittances from other countries was more than sufficient to compensate this decrease: Greece (+61.9% y/y), USA (+39.5% y/y), Israel (+97.2% y/y), Turkey (+44.7% y/y), and Italy (+10.6% y/y). Overall, money transfers were up 3.6% y/y to US$ 832.0mn in 9M16.

Exports up 8.3% y/y in September 2016

In September 2016, imports decreased 1.6% y/y to US$ 631.1mn (excluding one-offs), exports increased 8.3% y/y to US$ 201.8mn, and the trade deficit narrowed 5.7% y/y to US$ 429.3mn, according to GeoStat’s preliminary figures. In 9M16, the trade deficit was down 1.1% y/y to US$ 3.68bn, excluding one-offs. Detailed foreign trade statistics will be available on October 19, 2016.

Producer price index down 1.9% y/y and up 0.2% m/m in September 2016 

PPI for industrial goods increased 0.2% m/m in September 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 (+1.2% m/m), while prices were down for manufacture of basic and fabricated metals (-2.2% m/m). Prices were also up for electricity, gas, and water (+1.0% m/m). 

Annual PPI was down 1.9% in September 2016. Falling prices in manufacturing contributed the most to the overall index change (-4.1% y/y, -3.43ppts) as prices were down for manufacture of basic and fabricated metals (-13.1% y/y), and manufacture of chemical products (-17.7% y/y). Meanwhile, supply of electricity, gas and water prices were up 13.7% y/y.

NBG sold US$ 40mn

Last week, NBG intervened on the FX market and sold US$ 40mn, aimed at curbing fluctuation of the national currency. Overall, NBG bought total of US$ 278mn and sold US$ 240mn at 23 interventions YTD. GEL weakened 0.1% w/w and strengthened 2.6% YTD against the US$.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (BGEOLN) closed at 5.4% yield, trading at 103.4 (-0.2% w/w).  GOGC’s Eurobonds (GEOROG 05/17) were trading at 101.6 (-0.1% w/w), yielding 4.0% and (GEOROG 04/21) were trading at 105.3 (-0.1% w/w), yielding 5.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 112.4 (-0.2% w/w), yielding 5.2%. 

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 29.74/share (-2.27% w/w and +0.95% m/m). More than 208k shares traded in the range of GBP 29.64 – 30.80/share. Average daily traded volume was 57k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 0.63% w/w and gained 1.25% m/m. The volume of BGEO shares traded was at 0.53% of its capitalization. 

 TBC Bank Group (TBCG LN) closed the week at GBP 12.52 (-0.99% w/w and +13.46% m/m). More than 97k shares changed hands in the range of GBP 12.00 – 13.00/share. 

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.23/share (+1.65% w/w and +7.67% m/m). More than 63k shares were traded in the range of GBP 3.04 – 3.30/share. Average daily traded volume was 17k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,250mn (US$ 531.3mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.6mn) certificates of deposit, with an average yield of 6.45% (unchanged from previous issue).

Ministry of Finance Treasury Notes: 2-year GEL 10mn (US$ 4.3mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on October 12, 2016. The weighted average yield was fixed at 6.560%. The nearest treasury securities auction is scheduled for October 19, 2016, where GEL 20mn nominal value 5-year T-Notes will be sold.