Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Real GDP grew 2.2% y/y in 2016

Georgia’s real GDP growth averaged 1.2% y/y in 4Q16 (growth was 1.3% in October, 2.0% in November and 0.3% in December), according to GeoStat’s rapid estimates. As a result, output growth averaged 2.2% in 2016 after growing 2.9% in 2015, based on preliminary data.  Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics. Detailed 2016 GDP statistics will be published on 30 March 2017.

Tax revenues up 26.3% y/y in January 2017 

Consolidated budget tax revenues were up 26.3% y/y to GEL 712.5mn in January 2017.  The 2017 consolidated budget tax revenues are planned at GEL 9.5bn (+8.6% compared to 2016 actual tax revenues). 

Inflation rate at 3.9% y/y and 2.9% m/m in January 2017 

The annual CPI inflation was 3.9% in January 2017 after 1.8% inflation in previous month, according to GeoStat. Core inflation was at 2.8% in January. Overall price changes were driven by price increases in transport (+10.8% y/y, +1.35ppts), alcoholic beverages and tobacco (+18.9% y/y, +1.14ppts), and food and non-alcoholic beverages (+3.3% y/y, +0.99ppts), categories.

On a monthly basis, prices rose  2.9% in January 2017. Price increases in food and non-alcoholic beverages (+4.2% m/m, +1.27ppts), and transport (+7.2% m/m, +0.94ppts) categories were the major drivers of monthly inflation dynamics.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 5.7% yield, trading at 101.5 (-0.1% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.6 (+0.1% w/w), yielding 4.7% and GEOROG 04/21 traded at 105.6 (unchanged w/w), yielding 5.3%. Georgian Railway Eurobond (GRAIL) traded at a premium at 109.4 (unchanged % w/w), yielding 5.7%. 

Georgian Sovereign Eurobond (GEORG) closed at 111.0 (unchanged w/w) at 4.0% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 30.07/share (+4.12% w/w and +1.73% m/m). More than 588k shares traded in the range of GBP 28.75 – 30.45/share. Average daily traded volume was 155k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, gained 1.21% w/w and gained 1.49% m/m. The volume of BGEO shares traded was at 1.49% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 14.50 (-3.27% w/w and +0.69% m/m). More than 227k shares changed hands in the range of GBP 14.12 – 15.00/share. Averaged daily traded volume was 40k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.50/share (+2.11% w/w and -3.84% m/m). More than 17k shares were traded in the range of GBP 3.40 – 3.55/share.  Average daily traded volume was 16k in the last 4 weeks. The volume of GHG shares traded was at 0.01% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,100mn (US$ 406.1mn).

Ministry of Finance Treasury Bills: 1-year GEL 40.0mn (US$ 14.8mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on February 1, 2017. The weighted average yield was fixed at 7.735%. The nearest treasury security auction is scheduled for February 8, 2017, where GEL 20.0mn nominal value 182-day T-bills and GEL 40.0mn nominal value 2-year T-Notes will be sold.