Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Record high FDI in 2017

FDI increased 16.2% y/y reaching record high US$ 1.9bn in 2017, according to GeoStat’s preliminary figures. The transport and communication sector was the largest FDI recipient at US$ 527.1mn (-22.2% y/y, 28.3% of total), followed by financial sector at US$ 304.3mn (+97.7% y/y, 16.3% of total) and construction at US$ 294.6mn (+114.0% y/y, 15.8% of total). Azerbaijan topped the list of investors with US$ 482.1mn (-13.6% y/y), followed by Turkey at US$ 279.0mn (+36.0% y/y), and United Kingdom at US$ 250.4mn (+109.3% y/y).

Exports up 25.0% y/y in February 2018

In February 2017, exports increased 25.0% y/y to US$ 223.7mn, imports were up 8.7% y/y to US$ 640.0mn and the trade deficit widened 1.5% y/y to US$ 416.3mn according to GeoStat’s preliminary figures. In 2M18, trade deficit was up 7.4% to US$ 790.7mn as exports increased 25.5% y/y to US$ 446.4mn, while imports were up 13.3% y/y to US$ 1.2bn. Detailed foreign trade statistics will be available on March 19, 2018.

Money transfers up 21.0% y/y in February 2018

In February 2018, money transfers increased 21.0% y/y to US$ 113.9mn after growing 31.1% y/y in previous month, according to NBG. Money transfers were up from aalmost all major remitting countries: Russia (+10.1% y/y, 29.3% of total), Italy (+42.1% y/y, 12.4% of total), Greece (+32.5% y/y, 11.7% of total), Israel (+56.1% y/y, 10.4% of total), Turkey (+30.7% y/y, 8.7% of total). Meanwhile remittances were down from USA (-19.1% y/y, 7.2% of total). In 2M18 money transfers were up 25.8% y/y to US$ 223.9mn.

NBG keeps monetary policy rate unchanged at 7.25%

At its meeting on 14 March 2018, NBG’s monetary policy committee decided to keep its policy rate unchanged at 7.25%. According to NBG, inflation started decreasing since the beginning of 2018, reaching 2.7% in February as one-off factors affecting price growth in 2017 faded. NBG, however deemed appropriate to maintain the moderately tight monetary policy as inflation is still under pressure from the NEER, despite its recent appreciation. The gradual easing of the policy will be considered once the factors pushing inflation upwards are sufficiently weakened. According to the current NBG’s forecast, the inflation will remain close to its target level of 3% throughout 2018. The next committee meeting is scheduled for 2 May 2018.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.6% yield, trading at 101.8 (-0.5% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. GOGC Eurobonds (GEOROG) were trading at 104.9 (+0.2% w/w), yielding 5.0%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.2 (unchanged w/w), yielding 5.1%.

Georgian Sovereign Eurobonds (GEORG) closed at 108.9 (-0.2% w/w) at 3.8% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 35.26/share (+1.32% w/w and +6.01% m/m). More than 474k shares traded in the range of GBP 34.50 – 35.54/share. Average daily traded volume was 98k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 1.39% w/w and gained 0.36% m/m. The volume of BGEO shares traded was at 1.21% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 18.56 (+0.87% w/w and +11.81% m/m). More than 965k shares changed hands in the range of GBP 17.70 – 18.68 share. Averaged daily traded volume was 79k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.22/share (-1.38% w/w and -3.88% m/m). More than 114k shares were traded in the range of GBP 3.00 – 3.35/share. Average daily traded volume was 14k in the last 4 weeks. The volume of GHG shares traded was at 0.09% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 920mn (US$ 377.1mn).

Ministry of Finance Treasury Notes:

2-year GEL 40.0mn (US$ 16.4mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on March 14, 2018. The weighted average yield was fixed at 7.474%. The nearest treasury security auction is scheduled for March 21, 2018, where GEL 30.0mn nominal value 5-year T-Notes will be sold.

Ministry of Finance Treasury Bills:

182-days GEL 20.0mn (US$ 8.2mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on March 14, 2018. The weighted average yield was fixed at 7.286%.