Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- FDI down 32.9% y/y FDI was down 32.9% y/y to US$ 279mn (7.6% of GDP) in 1Q18, according to GeoStat’s preliminary figures. The major reason behind this decrease was ownership transfer from non-resident to resident companies (e.g. acquisition of Geocell by Silknet) and reduction of debt liabilities to non-resident direct investors. The financial sector was the largest FDI recipient at US$ 110.6mn (+41.6% y/y, 39.6% of total), followed by construction sector at US$ 69.1mn (+26.9% y/y, 24.7% of total), transport at US$ 56.1mn (-55.0% y/y, 20.1% of total) and manufacturing at US$ 40.2mn (6.3x higher y/y, 14.4% of total). United Kingdom topped the list of investors with US$ 82.7mn (+2.8% y/y), followed by Azerbaijan at US$ 51.0mn (-47.3% y/y), and China at US$ 41.6mn (5.7x higher y/y).

Exports up 50.2% y/y in May 2018

In May 2018, exports growth surged 50.2% y/y to record high US$ 323.3mn, imports were up 25.1% y/y to US$ 802.6mn and the trade deficit widened 12.4% y/y to US$ 479.3mn, according to GeoStat’s preliminary figures. In 5M18, trade deficit was up 20.9% to US$ 2.3bn as exports increased 28.0% y/y to US$ 1.3bn and imports were up 23.3% y/y to US$ 3.6bn. Detailed foreign trade statistics will be available on June 19, 2018.

Money transfers up 13.0% y/y in May 2018

In May 2018, money transfers increased 13.0% y/y to US$ 130.4mn, after growing 16.9% y/y in previous month, according to NBG. From major remitting countries, money transfers were up from Italy (+33.9% y/y, 12.0% of total), USA (+15.7% y/y, 10.7% of total), Greece (+13.6% y/y, 10.2% of total) and Israel (+34.5% y/y, 9.7% of total), while remittances were down from Russia (-1.7% y/y, 28.5% of total) and Turkey (-3.2% y/y, 7.4% of total). Overall, in 5M18 money transfers were up 19.2% y/y to US$ 609.3mn.

NBG keeps monetary policy rate unchanged at 7.25%

At its meeting on 13 June 2018, NBG’s monetary policy committee decided to keep its key rate unchanged at 7.25%. Inflation was 2.5% in May, below the 3.0% target, but the decision takes into account increased risks of transmission of inflationary pressures from the main trading partner countries due to higher volatility in financial markets. The committee also decided to reduce the minimum reserve requirements on local currency funding from 7.0% to 5.0%. The next committee meeting is scheduled for 25 July 2018.

Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.0% yield, trading at 100.0 (unchanged 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 94.8 (unchanged w/w), yielding 7.3%.

GOGC Eurobonds (GEOROG) were trading at 101.0 (-0.2% w/w), yielding 6.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 105.4 (+0.2% w/w), yielding 6.2%.

Georgian Sovereign Eurobonds (GEORG) closed at 106.4 (-0.2% w/w) at 4.4% yield to maturity. 

Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 19.28/share (-3.14% w/w and -14.08% m/m). More than 702k shares traded in the range of GBP 18.17 – 23.49/share. Average daily traded volume was 115k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.50% w/w and gained 1.29% m/m. The volume of BGEO shares traded was at 1.43% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 12.22/share (+9.9% w/w). More than 4,673k shares traded in the range of GBP 9.23 – 12.50/share. The volume of CGEO shares traded was at 11.88% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.18 (+0.82% w/w and -1.72% m/m). More than 134k shares changed hands in the range of GBP 15.76 – 17.24 share. Averaged daily traded volume was 134k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.70/share (-3.57% w/w and +2.27% m/m). More than 192k shares were traded in the range of GBP 2.70 – 3.02/share. Average daily traded volume was 25k in the last 4 weeks. The volume of GHG shares traded was at 0.15% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,130mn (US$ 458.9mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.1mn) certificates of deposit, with an average yield of 7.29% (unchanged from previous issue).

Ministry of Finance Treasury Notes:
2-year GEL 40.0mn (US$ 16.2mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on June 13, 2018. The weighted average yield was fixed at 7.451%. The nearest treasury security auction is scheduled for June 27, 2018, where GEL 30.0mn nominal value 5-year Benchmark bonds will be sold.

Ministry of Finance Treasury Bills:
182-days GEL 20.0mn (US$ 8.1mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on June 13, 2018. The weighted average yield was fixed at 7.329%.