Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 0.8% y/y in October 2016 

In October 2016, exports increased 0.8% y/y at US$ 189.3mn, imports were up 7.4% y/y to US$ 661.7mn, and the trade deficit widened 10.3% y/y to US$ 472.4mn according to GeoStat. Increased exports of copper ores (+4.7% y/y), cars (+26.0% y/y), wine (+24.9% y/y), ferro-alloys (+33.0% y/y), and spirituous beverages (+17.3% y/y) were the major commodities positively affecting exports growth in October 2016, while nuts (-3.9% y/y), and fertilizer (-84.4% y/y) exports decreased. 

Petroleum (+17.3% y/y), cars (+12.3% y/y), gases (+3.7% y/y), pharmaceuticals (+11.3% y/y), and phones (+21.9% y/y) represented the top 5 imported commodities in October 2016. 

In 10M16, trade deficit was up 0.2% y/y to US$ 4.16bn, excluding one-offs, as imports were down 2.1% y/y to US$ 5.86bn and exports fell 7.2% y/y to US$ 1.70bn.

NPLs at 3.9% y/y in October 2016 

In October 2016, the banking sector loan portfolio increased 7.3% y/y after growing 6.7% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 7.6% y/y and 2.7% m/m to GEL 16.9bn (US$ 7.0bn). Deposits were up 12.5% y/y to GEL 15.6bn (US$ 6.5bn), excluding the exchange rate effect. In unadjusted terms deposits were up 12.6% y/y and up 4.8% m/m, and deposit dollarization reached 69.7% (+0.5ppts m/m). NPLs stood at 3.9% in October 2016, up 0.8ppts y/y and up 0.1ppts m/m.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 6.0% yield, trading at 99.8 (-0.5% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 101.4 (unchanged w/w), yielding 3.7% and GEOROG 04/21 traded at 103.8 (unchanged w/w), yielding 5.8%. Georgian Railway Eurobond (GRAIL) traded at a premium at 107.2 (-0.6% w/w), yielding 6.2%. 

Georgian Sovereign Eurobond (GEORG) closed at 108.2 (-0.1% w/w) at 4.8% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 30.50/share (+7.96% w/w and -0.10% m/m). More than 425k shares traded in the range of GBP 27.85 – 31.42/share. Average daily traded volume was 70k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 0.35% w/w and lost 1.15% m/m. The volume of BGEO shares traded was at 1.08% of its capitalization. 

 TBC Bank Group (TBCG LN) closed the week at GBP 13.49 (+1.81% w/w and +2.39% m/m). More than 216k shares changed hands in the range of GBP 13.00 – 13.55/share. Averaged daily traded volume was 29k in the last 4 weeks.  

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.65/share (+2.10% w/w and +2.01% m/m). More than 70k shares were traded in the range of GBP 3.58 – 3.70/share.  Average daily traded volume was 11k 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 1,310mn (US$ 524.5mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 8.0mn) certificates of deposit, with an average yield of 6.87% (up by 15bps from previous issue).

Ministry of Finance Treasury Notes: 10-year GEL 7.5mn (US$ 3.0mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on November 22, 2016. The weighted average yield was fixed at 10.750%. The nearest treasury securities auction is scheduled for December 7, 2016, where GEL 30mn nominal value 2-year T-Notes will be sold.