Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy -- NPLs at 2.4% in June 2018

In June 2018, the banking sector loan portfolio increased 18.4% y/y after growing 18.6% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 19.8% y/y and up 1.0% m/m to GEL 23.1bn (US$ 9.4bn). Deposits were up 19.2% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 20.4% y/y and up 1.2% m/m to GEL 20.2bn (US$ 8.3bn). Deposit dollarization declined to 60.8% (-6.8ppts y/y and -1.5ppts m/m). NPLs stood at 2.4% in June 2018 (-1.1ppts y/y and -0.2ppts m/m).

NBG reduced the monetary policy rate by 0.25ppts to 7.0%

At its meeting on 25 July 2018, NBG’s monetary policy committee decided to reduce its key rate by 0.25ppts to7.0%. Inflation was 2.2% in June, below the 3.0% target. The policy rate cut was mainly due to the reduced inflationary pressure stemming from higher than expected appreciation of the nominal exchange rate. The committee also decided to increase the minimum reserve requirements on short-term foreign currency funding from 20.0% to 25.0%.The next committee meeting is scheduled for 5 September 2018.

NBG continues to build reserves

On July 27, 2018, the NBG intervened on the FX market and purchased US$ 10mn to curb GEL’s appreciation. YDT, the NBG purchased US$ 70mn and GEL strengthened 5.5% against USD.

Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.0% yield, trading at 100.1 (+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 94.4 (-0.1% w/w), yielding 7.4%.

GOGC Eurobonds (GEOROG) were trading at 101.7 (-0.2% w/w), yielding 6.0%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 106.4 (+0.4% w/w), yielding 5.9%.

Georgian Sovereign Eurobonds (GEORG) closed at 106.8 (+0.1% w/w) at 4.2% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 18.15/share (+2.40% w/w and -4.95% m/m). More than 238k shares traded in the range of GBP 17.68 – 18.57/share. Average daily traded volume was 65k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.43% w/w and lost 0.05% m/m. The volume of BGEO shares traded was at 0.49% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 10.00/share (+2.46% w/w and -9.26% m/m). More than 304k shares traded in the range of GBP 9.70 – 10.32/share. Average daily traded volume was 88k in the last 4 weeks. The volume of CGEO shares traded was at 0.64% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.00 (-1.39% w/w and -0.12% m/m). More than 103k shares changed hands in the range of GBP 16.92 – 17.50/share. Average daily traded volume was 20k in the last 4 weeks. The volume of TBCG shares traded was at 0.19% of its capitalization.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.59/share (-0.58% w/w and +2.17% m/m). More than 172k shares were traded in the range of GBP 2.50 – 2.67/share. Average daily traded volume was 17k in the last 4 weeks. The volume of GHG shares traded was at 0.13% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 790mn (US$ 322.6mn).

Ministry of Finance Benchmark Bonds:

5-year GEL 30.0mn (US$ 12.3mn) Benchmark Bonds of Ministry of Finance were sold at the auction held at NBG on July 25, 2018. The weighted average yield was fixed at 7.69%. The nearest treasury security auction is scheduled for August 1, 2018, where GEL 40mn nominal value 1-year T-Notes will be sold.