Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 5.1% y/y in December 2016 

In December 2016, exports increased 5.1% y/y to US$ 194.0mn, imports were up 1.9% y/y to US$ 737.1mn (excluding C-hepatitis medication imports), and the trade deficit widened 0.8% y/y to US$ 543.1mn according to GeoStat. Increased exports of ferro-alloys (+75.3% y/y), cars (+18.7% y/y), wine (+9.6% y/y), spirituous beverages (+59.0% y/y), and fertilizers (+116.6% yy) were the major commodities positively affecting exports growth in December 2016, while copper ores (-10.7% y/y), and pharmaceuticals (-38.8% y/y) exports decreased. 

Petroleum (+80.0% y/y), gases (+21.3% y/y), cars (+21.0% y/y), pharmaceuticals (-4.2% y/y), and phones (+62.6% y/y) represented the top 5 imported commodities in December 2016. 

In 2016, trade deficit was up 0.8% y/y to US$ 5.1bn, excluding one-offs, as imports were down 0.7% y/y to US$ 7.2bn and exports fell 4.1% y/y to US$ 2.1bn.

Money transfers up 16.7% y/y in December 2016 

In December 2016, money transfers increased 16.7% y/y to US$ 119.0mn after growing 14.8% y/y in previous month, according to NBG. Money transfers were up from all major remitting countries: Russia (+2.5% y/y, 34.9% of total), USA (+39.0% y/y, 11.9% of total), Italy (+12.4% y/y, 10.3% of total), Greece (+22.9% y/y, 10.0% of total) and Turkey (+51.5% y/y, 7.0% of total). Overall, money transfers were up 6.6% y/y to US$ 1.15bn in 2016.

Producer price index up 4.8% m/m and up 7.5% y/y in December 2016 

PPI for industrial goods increased 4.8% m/m in December 2016 following a 2.8% m/m growth in previous month, according to GeoStat. A 5.4% price increase for manufacturing contributed the most to the overall index change. In this section prices were up for manufacture of basic and fabricated metals (+22.8% m/m vs +8.4% m/m in Nov-16) and up for manufacture of food products, beverages and tobacco (+2.5% m/m). 

Annual PPI was up 7.5% in December 2016 after a 1.7% growth in previous month. Rising prices in manufacturing contributed the most to the overall index change (+7.4% y/y,) as prices were up for manufacture of basic and fabricated metals (+35.5% y/y vs. +4.7% y/y in Nov-16) and food products, beverages and tobacco (+5.9% y/y). Upward pressure on prices also came from supply of electricity, gas and water (+5.1% y/y), and mining and quarrying (+16.3% y/y vs. +5.9% y/y in Nov-16) sections.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 5.7% yield, trading at 101.6 (+1.2% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.7 (-0.1% w/w), yielding 4.6% and GEOROG 04/21 traded at 105.6 (+1.0% w/w), yielding 5.3%. Georgian Railway Eurobond (GRAIL) traded at a premium at 109.3 (+2.1% w/w), yielding 5.8%. 

Georgian Sovereign Eurobond (GEORG) closed at 110.9 (+1.0% w/w) at 4.0% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 27.84/share (+0.18% w/w and -7.49% m/m). More than 1,020k shares traded in the range of GBP 27.24 – 28.17/share. Average daily traded volume was 103k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 1.24% w/w and gained 2.10% m/m. The volume of BGEO shares traded was at 2.58% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 14.86 (+2.48% w/w and -1.91% m/m). More than 75k shares changed hands in the range of GBP 14.19 – 15.00/share. Averaged daily traded volume was 27k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.50/share (+2.94% w/w and -4.11% m/m). More than 108k shares were traded in the range of GBP 3.37 – 3.70/share.  Average daily traded volume was 20k in the last 4 weeks. The volume of GHG shares traded was at 0.08% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,250mn (US$ 469.5mn).

Ministry of Finance Treasury Securities: 1-year GEL 40.0mn (US$ 15.1mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on January 18, 2017. The weighted average yield was fixed at 7.623%. The nearest treasury security auction is scheduled for January 25, 2017, where GEL 20.0mn nominal value 5-year T-Notes will be sold.