Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 16.8% y/y in November 2016 

In November 2016, exports increased 16.8% y/y to US$ 218.7mn, imports were up 12.8% y/y to US$ 649.6mn, and the trade deficit widened 10.9% y/y to US$ 430.9mn according to GeoStat. Increased exports of manganese ores (up 16X y/y), wine (+52.4% y/y), spirituous beverages (+72.3% y/y), ferro-alloys (+19.6% y/y), and citrus fruit (+259.2% yy) were the major commodities positively affecting exports growth in November 2016, while copper ores (-39.4% y/y), and pharmaceuticals (-16.0% y/y) exports decreased. 

Petroleum (+6.0% y/y), gases (+15.2% y/y), cars (+13.2% y/y), pharmaceuticals (+7.9% y/y), and phones (+40.5% y/y) represented the top 5 imported commodities in November 2016. 

In 11M16, trade deficit was up 1.2% y/y to US$ 4.59bn, excluding one-offs, as imports were down 0.7% y/y to US$ 6.51bn and exports fell 5.0% y/y to US$ 1.92bn.

Real GDP up 2.3% y/y in 3Q16

Real GDP grew 2.3% y/y according to GeoStat’s preliminary data. GDP deflator was 3.2% y/y. The growth base in 3Q16 was diversified, with hotels and restaurants sector generating the largest increase at 13.4% y/y. Financial sector (+9.8% y/y) and real estate (+7.5% y/y) were the other top performers. Positive growth was also posted in two largest sectors of Georgian economy: trade (+3.6% y/y), and manufacturing (+1.4% y/y). Transport (-4.2% y/y), communication (-0.5% y/y), and agriculture (-0.1% y/y) were the only sectors in the red in 3Q16. 

NPLs at 4.0% y/y in November 2016 

In November 2016, the banking sector loan portfolio increased 9.5% y/y after growing 7.3% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 13.1% y/y and 5.3% m/m to GEL 17.8bn (US$ 7.0bn). Deposits were up 10.7% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 14.8% y/y and up 3.4% m/m to GEL 16.2bn (US$ 6.4bn), and deposit dollarization reached 71.2% (+1.5ppts m/m). NPLs stood at 4.0% in November 2016, up 0.8ppts y/y and up 0.1ppts m/m.

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$ 280mn at 24 interventions YTD. GEL weakened 14.8% against the US$ YTD.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 6.0% yield, trading at 100.3 (+0.1% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.9 (unchanged w/w), yielding 4.4% and GEOROG 04/21 traded at 104.4 (+0.% w/w), yielding 5.6%. Georgian Railway Eurobond (GRAIL) traded at a premium at 106.9 (unchanged w/w), yielding 6.3%. 

Georgian Sovereign Eurobond (GEORG) closed at 109.7 (+0.5% w/w) at 4.4% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.59/share (-5.55% w/w and -4.18% m/m). More than 471k shares traded in the range of GBP 29.54 – 31.45/share. Average daily traded volume was 106k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, gained 0.70% w/w and gained 1.63% m/m. The volume of BGEO shares traded was at 1.19% of its capitalization.

 TBC Bank Group (TBCG LN) closed the week at GBP 14.69 (-4.86% w/w and +11.88% m/m). More than 675k shares changed hands in the range of GBP 14.45 – 15.63/share. Averaged daily traded volume was 216k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.55/share (-4.96% w/w and -1.53% m/m). More than 75k shares were traded in the range of GBP 3.50 – 3.80/share.  Average daily traded volume was 13k in the last 4 weeks. The volume of GHG shares traded was at 0.06% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,200mn (US$ 430.9mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 7.5mn) certificates of deposit, with an average yield of 6.97% (up by 10bps from previous issue).