Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

NPLs at 3.8% y/y in September 2016 

In September 2016, the banking sector loan portfolio increased 4.8% y/y after growing 8.2% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 5.2% y/y and 0.5% m/m to GEL 16.5bn (US$ 7.1bn). Deposits were up 9.7% y/y, excluding the exchange rate effect, driven by FX-denominated deposit growth, resulting pick up in deposit dollarization to 69.2% in September from 69.0% in previous month. In nominal terms, deposits were up 7.8% y/y and 2.4% m/m to GEL 14.9bn (US$ 6.4bn). NPLs stood at 3.8% in September 2016, up 0.9ppts y/y and down 0.2ppts m/m.

NBG keeps its policy rate unchanged at 6.5%

At its meeting on October 26, 2016, NBG’s monetary policy committee decided to keep the policy rate unchanged at 6.5%. NBG cited that the monetary policy decision is based on the macroeconomic forecast, according to which weak aggregate demand and lower inflation expectations indicate the need to decrease the monetary policy rate to its neutral value in the medium term, however the reduction in the policy rate implemented in the previous periods has not completely passed on to the economy, so it is expedient to implement the normalization policy in a gradual manner. The next committee meeting is scheduled for December 14, 2016.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 5.4% yield, trading at 103.1 (-0.2% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 101.7 (unchanged w/w), yielding 3.7% and GEOROG 04/21 traded at 105.4 (-0.2% w/w), yielding 5.4%. Georgian Railway Eurobond (GRAIL) traded at a premium at 112.3 (-0.3% w/w), yielding 5.2%. 

Georgian Sovereign Eurobond (GEORG) closed at 112.0 (-0.1% w/w) at 3.9% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.82/share (-1.13% w/w and +2.51% m/m). More than 160k shares traded in the range of GBP 29.07 – 30.65/share. Average daily traded volume was 42k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 1.56% w/w and lost 0.78% m/m. The volume of BGEO shares traded was at 0.41% of its capitalization. 

TBC Bank Group (TBCG LN) closed the week at GBP 12.83 (-1.35% w/w and +4.69% m/m). More than 208k shares changed hands in the range of GBP 12.75 – 13.25/share. Averaged daily traded volume was 145k in the last 4 weeks.  

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.60/share (+6.19% w/w and +16.50% m/m). More than 284k shares were traded in the range of GBP 3.30 – 3.80/share. Average daily traded volume was 30k in the last 4 weeks. The volume of GHG shares traded was at 0.22% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,146mn (US$ 475.7mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 8.4mn) certificates of deposit, with an average yield of 6.72% (up by 14bps from previous issue).

Ministry of Finance Treasury Notes: 1-year GEL 50mn (US$ 20.9mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on October 26, 2016. The weighted average yield was fixed at 6.866%. The nearest treasury securities auction is scheduled for November 2, 2016, where GEL 45mn nominal value 2-year T-Notes will be sold.