Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy --  Real GDP grew 7.5% in May 2018 . Georgia’s economy expanded 7.5% y/y in May 2018, after growing 6.5% y/y in previous month, according to GeoStat’s rapid estimates. Fastest growing sectors were transport, manufacturing, trade, financial intermediation, and hotels and restaurants in May. Overall, in 5M18 real GDP growth was 6.1% y/y. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Current account deficit was 11.6% (+0.2ppts y/y) of GDP in 1Q18, increasing 17.7% y/y to US$ 428.0mn, according to NBG. Merchandize trade deficit, traditionally the major contributor to deficit creation, increased 18.9% y/y to US$ 971.0mn, as exports increased 26.5% y/y, while imports were up 22.6% y/y. Positive balance in service was up 17.6% y/y to US$ 378.3mn (10.3% of GDP), driven by strong tourism inflows (up 29.4% y/y to US$ 550.8mn). Surplus in current transfers amounted to US$ 340.7mn (9.3% of GDP, up 13.0% y/y). Together, services and transfers financed 74% of the trade deficit. Net FDI (4.8% of GDP) and other investments (7.9% of GDP) were major funding categories of the CA deficit.

NPLs at 2.6% in May 2018

In May 2018, the banking sector loan portfolio increased 18.6% y/y after growing 22.1% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 20.0% y/y and up 1.1% m/m to GEL 22.9bn (US$ 9.3bn). Deposits were up 20.6% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 22.3% y/y and up 0.7% m/m to GEL 20.0bn (US$ 8.1bn). Deposit dollarization declined to 62.3% (-6.3ppts y/y and -0.2ppts m/m). NPLs stood at 2.6% in May 2018 (-1.1ppts y/y and unchanged m/m).

NBG Purchased USD$ 20.0mn

On 25 and 28 June 2018, the NBG intervened on the FX market and purchased US$ 10.0mn and US$ 10.0mn, respectively, on its foreign exchange auction. YTD, NBG purchased US$ 50mn.


Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.0% yield, trading at 99.9 (-0.04% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (-0.5% w/w), yielding 10.7%. Georgia Capital Eurobonds (GEOCAP) were trading at 94.3 (-0.1% w/w), yielding 7.4%.

GOGC Eurobonds (GEOROG) were trading at 101.0 (+0.2% w/w), yielding 6.3%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 105.5 (+0.3% w/w), yielding 6.2%.

Georgian Sovereign Eurobonds (GEORG) closed at 106.7 (+0.2% w/w) at 4.3% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 18.85/share (-2.19% w/w and +1.14% m/m). More than 519k shares traded in the range of GBP 18.84 – 19.63/share. Average daily traded volume was 131k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.76% w/w and gained 0.49% m/m. The volume of BGEO shares traded was at 1.06% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 10.30/share (-9.01% w/w and -7.51% m/m). More than 581k shares traded in the range of GBP 10.25 – 11.55/share. The volume of CGEO shares traded was at 1.50% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.46 (+3.31% w/w and +8.72% m/m). More than 197k shares changed hands in the range of GBP 16.54 – 17.50/share. Average daily traded volume was 47k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.52/share (-1.37% w/w and -13.43% m/m). More than 173k shares were traded in the range of GBP 2.39 – 2.59/share. Average daily traded volume was 20k in the last 4 weeks. The volume of GHG shares traded was at 0.13% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 900mn (US$ 366.6mn).

Ministry of Finance Treasury Notes:

5-year GEL 30.0mn (US$ 12.2mn) Benchmark Bonds of Ministry of Finance were sold at the auction held at NBG on June 27, 2018. The weighted average yield was fixed at 7.748%. The nearest treasury security auction is scheduled for July 4, 2018, where GEL 40mn nominal value 1-year T-bills will be sold.