Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Real GDP revised up 5.0% y/y in 2017

GDP growth in Georgia came in at 5.0% in 2017 revised up from 4.8% rapid estimate figure, according to GeoStat. Fastest growing sectors in 2017 were: construction (+11.2% y/y), hotels and restaurants (+11.2% y/y), financial intermediation (+9.2% y/y), and mining and quarrying (+7.1% y/y), while real growth was down in agriculture (-2.7% y/y).

Exports up 25.0% y/y in February 2018

In February 2018, 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$ 416.4mn, according to GeoStat.

In February 2018, copper (+62.3% y/y), cars (+162.1% y/y), ferro-alloys (-25.4% y/y), wine (+30.8% y/y) and fertilizers (+283.7% y/y) were the top 5 exported commodities. A 30.5% of exports was directed to the EU (+40.3% y/y), 42.1% were directed to the CIS (+46.9% y/y) and 27.4% to other countries (-7.4% y/y).

Petroleum (+10.6% y/y), gases (-5.3% y/y), copper (-4.4% y/y), cars (+9.1% y/y) and pharmaceuticals (-14.2% y/y) represented the top 5 imported commodities in February 2018.

Producer price index down 0.9% m/m and up 6.0% y/y in February 2018

PPI for industrial goods was down 0.9% m/m in February 2018, according to GeoStat. A 1.0% price decrease for manufacturing contributed the most to the overall index change. Annual PPI was up 6.0% in February 2018. Rising prices in manufacturing (+5.1% y/y) contributed the most to the overall index change. Prices were also up for supply of electricity, gas and water (+11.6% y/y).

Fitch revises Georgia's Outlook to positive

On 16 March 2018, Fitch affirmed Georgia’s sovereign credit rating at BB- and revised the Outlook to positive from stable. The upgrade in outlook reflects the key rating drivers including a stable macroeconomic environment, improvement in current account deficit, and favourable governance and business environment indicators.

EU plans to invest EUR 4.1bn in Georgia

On 21 March 2018, EU held a regional launch event in Tbilisi as part of implementation of External Investment Plan (EIP). Under this instrument EU will invest EUR 4.1bn (GEL 12bn) over 2018-2020 in Georgia. At initial stage, funding will be directed in sustainable energy and connectivity, MSMEs, agriculture, sustainable cities and digitalization.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.7% yield, trading at 101.5 (-0.3% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. Georgia Capital Eurobonds (GEOCAP) were trading at 97.3 (-0.7% w/w), yielding 6.7%.
GOGC Eurobonds (GEOROG) were trading at 104.2 (-0.7% w/w), yielding 5.3%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 119.7 (-0.5% w/w), yielding 5.2%.

Georgian Sovereign Eurobonds (GEORG) closed at 108.3 (-0.6% w/w) at 3.9% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 35.48/share (+0.62% w/w and +7.13% m/m). More than 297k shares traded in the range of GBP 34.96 – 36.52/share. Average daily traded volume was 94k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 2.45% w/w and lost 2.43% m/m. The volume of BGEO shares traded was at 0.76% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 18.50 (-0.32% w/w and +11.04% m/m). More than 212k shares changed hands in the range of GBP 17.90 – 19.30 share. Averaged daily traded volume was 86k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.12/share (-3.11% w/w and -7.00% m/m). More than 14k shares were traded in the range of GBP 3.10 – 3.30/share. Average daily traded volume was 12k in the last 4 weeks. The volume of GHG shares traded was at 0.01% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 800mn (US$ 328.9mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.2mn) certificates of deposit, with an average yield of 7.26% (down 0.08ppts from previous issue).

Ministry of Finance Treasury Notes:

5-year GEL 30.0mn (US$ 12.3mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on March 21, 2018. The weighted average yield was fixed at 7.814%.