Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

NPLs at 3.2% in September 2017

In September 2017, the banking sector loan portfolio increased 16.0% y/y after growing 13.6% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 22.8% y/y and 3.0% m/m to GEL 20.2bn (US$ 8.2bn). Deposits were up 18.4% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 23.2% y/y and up 3.2% m/m to GEL 18.3bn (US$ 7.4bn). Deposit dollarization reached 65.4% (-3.8ppts y/y and -0.2ppts m/m). NPLs stood at 3.2% in September 2017 (-0.7ppts y/y and -0.2ppts m/m).

NBG keeps its policy rate unchanged at 7.0%

At its meeting on 25 October 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 7.0%. The decision is based on themacroeconomic forecast, according to which the inflation is expected to be above 4.0% target rate during 2017 due to one-offs, and the inflation will get close to the 3.0% target level in the beginning of 2018, once temporary factors expire. NBG added that the annual inflation was 6.2% in September 2017, however inflation was slightly below inflation forecast for 3Q17. NBG also noted that inflation expectations have not changed recently and it expects the key rate to gradually decrease to its neutral level in the medium term given the absence of additional factors affecting price level. The next committee meeting is scheduled for 13 December 2017 (NBG increased the key rate to 6.75% on January 25 and to 7.0% on May 2, and kept the rate unchanged at three previous meetings, on June 14, on July 26 and September 6).

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.4% yield, trading at 103.1 (+0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (unchanged w/w), yielding 11.0%. GOGC Eurobonds (GEOROG) were trading at 107.1 (+0.6% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.6 (-0.2% w/w), yielding 4.9%.
Georgian Sovereign Eurobonds (GEORG) closed at 112.3 (-0.2% w/w) at 3.1% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 35.39/share (+2.70% w/w and +9.70% m/m). More than 278k shares traded in the range of GBP 34.38 – 35.61/share. Average daily traded volume was 55k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.02% w/w and gained 2.93% m/m. The volume of BGEO shares traded was at 0.71% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.22 (+1.18% w/w and +5.84% m/m). More than 99k shares changed hands in the range of GBP 16.75 – 17.33 share. Averaged daily traded volume was 32k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.66/share (+4.57% w/w and +17.50% m/m). More than 214k shares were traded in the range of GBP 3.43 – 3.70/share. Average daily traded volume was 28k in the last 4 weeks. The volume of GHG shares traded was at 0.21% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,050mn (US$ 414.7mn).

Ministry of Finance Treasury Notes:

5-year GEL 20.0mn (US$ 7.9mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on October 25, 2017. The weighted average yield was fixed at 7.718%. The nearest treasury security auction is scheduled for November 1, 2017, where GEL 20.0mn nominal value 1-year T-Bills will be sold.