Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy Real GDP growth revised up to 5.3% in 1Q18

Economic growth in Georgia was 5.3% in 1Q18, revised up from 5.2% rapid estimate figure according to GeoStat. In 1Q18, the fastest growing sectors in real terms were: real estate operations (+13.4% y/y), social and personal service activities (+13.4% y/y), mining (+11.4% y/y), hotels and restaurants (+10.9% y/y) and electricity, gas and water supply (+10.0% y/y). Real growth was down 2.2% y/y in agriculture. The largest sectors were trade (16.9% of total), mining (10.1% of total) and construction (8.9% of total) in 1Q18.

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 25.2% y/y to US$ 803.4mn and the trade deficit widened 12.5% y/y to US$ 480.1mn, according to GeoStat’s. Overall, in 5M18, exports increased 28.0% y/y to US$ 1.3bn, imports were up 23.4% y/y to US$ 3.6bn and the trade deficit widened 20.9% to US$ 2.3bn.

Increased exports of copper (+47.7% y/y), ferro-alloys (+184.6% y/y), cars (+67.1% y/y) and wine (+33.7% y/y) were the major commodities driving exports growth in May 2018. A 23.0% (+13.7% y/y of exports were directed to the EU, 45.5% (+52.3% y/y) to the CIS and 31.5% (+12.5% y/y to other countries.

Petroleum (+36.6% y/y), cars (+20.9% y/y), air-turbines (111x higher y/y) and pharmaceuticals (+29.2% y/y) represented the major imported commodities in May 2018.

Producer prices up 8.4% y/y in May 2018

Producer price index was up 8.4% y/y in May 2018. Rising prices in manufacturing (+7.1% y/y) and electricity, gas and water supply (+15.2% y/y) contributed the most to the overall index change.

NBG Purchased US$ 10.0mn

On June 22 2018, the NBG intervened on the FX market and purchased US$ 10.0mn on its foreign exchange auction.

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 94.4 (-0.4% w/w), yielding 7.3%.

GOGC Eurobonds (GEOROG) were trading at 100.9 (-0.1% w/w), yielding 6.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 105.0 (-0.3% w/w), yielding 6.3%.

Georgian Sovereign Eurobonds (GEORG) closed at 106.5 (+0.1% w/w) at 4.4% yield to maturity. 

Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 19.27/share (-0.01% w/w and -16.21% m/m). More than 686k shares traded in the range of GBP 18.83 – 19.40/share. Average daily traded volume was 140k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.03% w/w and 0.91% m/m, respectively. The volume of BGEO shares traded was at 1.40% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 11.32/share (-8.22% w/w). More than 1,106k shares traded in the range of GBP 11.10 – 12.30/share. The volume of CGEO shares traded was at 2.83% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.90 (-0.94% w/w and -3.76% m/m). More than 291k shares changed hands in the range of GBP 16.12 – 17.24 share. Averaged daily traded volume was 44k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.55/share (-5.56% w/w and -15.84% m/m). More than 45k shares were traded in the range of GBP 2.55 – 2.69/share. Average daily traded volume was 21k in the last 4 weeks. The volume of GHG shares traded was at 0.03% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,100mn (US$ 447.6mn).

Ministry of Finance Treasury Notes:

There was no treasury security auction during 18-22 June 2018. The nearest treasury security auction is scheduled for June 27, 2018, where GEL 30.0mn nominal value 5-year Benchmark bonds will be sold.