Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Real GDP growth was 5.5% y/y in February 2018

Georgia’s economy expanded 5.5% y/y in February 2018 after growing 4.4% y/y in previous month, according to GeoStat’s rapid estimates. In February 2018, the growth was recorded in manufacturing, real estate and trade sectors. Overall real GDP growth was 4.9% y/y in 2M18. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Current account deficit shrank to 8.7% of GDP in 2017

CA deficit narrowed to 8.7% of GDP in 2017 from 12.8% in 2016, decreasing 28.8% y/y to US$ 1.3bn, according to NBG. Merchandize trade deficit, traditionally the major contributor to deficit creation, decreased 0.7% y/y to US$ 3.8bn, as exports increased 23.9% y/y, while imports were up 9.9% y/y. Positive balance in services was up 27.7% y/y to US$ 2.1bn (13.6% of GDP), driven by strong tourism inflows (up 27% y/y). Surplus in current transfers amounted to US$ 1.3bn (8.4% of GDP, up 13.3% y/y). Together, services and transfers financed 87% of the trade deficit. Net FDI, remains major source of CA deficit funding, and was up 33.3% y/y to US$ 1.6bn (10.5% of GDP).

NPLs at 2.8% in February 2018

In February 2018, the banking sector loan portfolio increased 20.0% y/y after growing 19.6% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 17.2% y/y and up 0.2% m/m to GEL 21.9bn (US$ 8.8bn). Deposits were up 19.0% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 15.9% y/y and flat m/m to GEL 19.2bn (US$ 7.7bn). Deposit dollarization declined to 63.7% (-6.7ppts y/y and -0.6ppts m/m). NPLs stood at 2.8% in February 2018 (-1.0ppts y/y and -0.1ppts m/m).

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.7% yield, trading at 101.3 (-0.2% 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 97.0 (-0.3% w/w), yielding 6.7%.
GOGC Eurobonds (GEOROG) were trading at 104.0 (-0.2% w/w), yielding 5.3%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 109.7 (unchanged w/w), yielding 5.2%.

Georgian Sovereign Eurobonds (GEORG) closed at 108.1 (-0.2% w/w) at 4.0% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 35.56/share (+0.23% w/w and +4.90% m/m). More than 269k shares traded in the range of GBP 35.00 – 35.88/share. Average daily traded volume was 75k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.73% w/w and lost 1.15% m/m. The volume of BGEO shares traded was at 0.68% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 18.40 (-0.54% w/w and +17.65% m/m). More than 310k shares changed hands in the range of GBP 18.32 – 19.00 share. Averaged daily traded volume was 90k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.09/share (-0.96% w/w and -6.36% m/m). More than 19k shares were traded in the range of GBP 3.00 – 3.25/share. Average daily traded volume was 10k in the last 4 weeks. The volume of GHG shares traded was at 0.02% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 820mn (US$ 337.8mn).

Ministry of Finance Treasury Notes:

The nearest treasury security auction is scheduled for April 4, 2018, where GEL 40.0mn nominal value 1-year T-Bills will be sold.