Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Tourist arrivals up 14.8% y/y in December 2016 

Total international arrivals to Georgia increased 4.3% y/y to 0.49mn visitors in December 2016, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 14.8% y/y to 0.18mn persons (36.6% of total) in December 2016 after growing 14.1% y/y in previous month. Out of top countries by arrivals, in December 2016 visitors continued to increase from Armenia (+9.5% y/y), Azerbaijan (+3.9% y/y) and Ukraine (+14.0% y/y), while arrivals were down from Russia (-2.3% y/y) and Turkey (-16.7% y/y). Arrivals from EU were up 28.6% y/y. In 2016, the number of total international arrivals was up 7.6% y/y to 6.35mn persons, while the number of tourists increased 19.1% y/y to 2.71mn persons.

Inflation rate at 1.8% y/y and 1.0% m/m in December 2016 

The annual CPI inflation was 1.8% in December 2016 after 0.6% inflation in previous month, according to GeoStat. Core inflation was at 1.8% in December. Overall price changes were driven by price increases in alcoholic beverages and tobacco (+13.1% y/y, +0.80ppts), food and non-alcoholic beverages (+1.6% y/y, +0.51ppts), and transport (+2.2% y/y, +0.26ppts) categories.

On a monthly basis, inflation rate was 1.0% in December 2016. Price increases in food and non-alcoholic beverages (+1.5% m/m, +0.47ppts), and transport (+2.3% m/m, +0.27ppts) were the major drivers of monthly inflation dynamics.

Tax revenues up 10.5% y/y in November 2016 

Consolidated budget tax revenues were up 10.5% y/y to GEL 715.7mn in November 2016. In 11M16, consolidated budget tax revenues stood at GEL 7.9bn (+9.6% y/y) and accounted for 89.9% of annual tax revenue plan, which was revised upward.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 5.7% yield, trading at 101.6 (+1.3% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.8 (unchanged w/w), yielding 4.6% and GEOROG 04/21 traded at 106.1 (+1.4% w/w), yielding 5.1%. Georgian Railway Eurobond (GRAIL) traded at a premium at 109.1 (+1.9% w/w), yielding 5.8%. 

Georgian Sovereign Eurobond (GEORG) closed at 110.8 (+0.8% w/w) at 4.1% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.41/share (-3.75% w/w and -7.74% m/m). More than 347k shares traded in the range of GBP 28.31 – 29.96/share. Average daily traded volume was 88k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, gained 1.32% w/w and gained 5.09% m/m. The volume of BGEO shares traded was at 0.88% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 14.60 (+0.21% w/w and +3.93% m/m). More than 94k shares changed hands in the range of GBP 14.19 – 14.80/share. Averaged daily traded volume was 178k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.40/share (-4.00% w/w and -8.17% m/m). More than 56k shares were traded in the range of GBP 3.40 – 3.60/share.  Average daily traded volume was 13k in the last 4 weeks. The volume of GHG shares traded was at 0.04% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,150mn (US$ 430.8mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 7.5mn) certificates of deposit, with an average yield of 6.88% (up by 5bps from previous issue).

Ministry of Finance Treasury Notes: 1-year GEL 40.0mn (US$ 15.1mn) T-bills of Ministry of Finance were sold at the auction held at NBG on January 4, 2017. The weighted average yield was fixed at 7.51%. The nearest treasury securities auction is scheduled for January 11, 2017, where GEL 20.0mn nominal value 2-year T-Notes will be sold.