Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 44.7% y/y in January 2017

In January 2017, exports increased 44.7% y/y to US$ 176.8mn, imports were up 15.4% y/y to US$ 473.9mn, and the trade deficit widened 2.9% y/y to US$ 297.1mn according to GeoStat. Increased exports of ferro-alloys (+611.0% y/y), copper (+34.0% y/y), wine (+98.1% y/y), pharmaceuticals (+97.1% y/y), and spirituous beverages (+125.8% y/y) were the major commodities positively affecting exports growth in January 2017, while hazelnuts (-49.2% y/y), and cars (-10.4% y/y) exports decreased.

Gases (+0.6% y/y), cars (-15.6% y/y), petroleum (-27.7% y/y), copper (-11.2% y/y), and pharmaceuticals (+69.5% y/y) represented the top 5 imported commodities in January 2017. 

Producer price index up 2.3% m/m and up 9.8% y/y in January 2017 

PPI for industrial goods increased 2.3% m/m in January 2017 following a 4.8% m/m growth in previous month, according to GeoStat. A 1.1% price increase for manufacturing contributed the most to the overall index change. In this section prices were up for manufacture of basic and fabricated metals (+2.9% m/m vs +22.8% m/m in Dec-16) and up for manufacture of food products, beverages and tobacco (+0.5% m/m). 

Annual PPI was up 9.8% in January 2017 after a 7.5% growth in previous month. Rising prices in manufacturing (+8.8% y/y) contributed the most to the overall index change, as prices were up for manufacture of basic and fabricated metals (+48.3% y/y vs. +35.5% y/y in Dec-16). Upward pressure on prices also came from supply of electricity, gas and water (+10.9% y/y), and mining and quarrying (+25.7% y/y vs. +16.3% y/y in Dec-16) sections.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobond (BGEOLN) closed at 5.6% yield, trading at 101.9 (+0.1% w/w).  GOGC Eurobonds - GEOROG 05/17 traded at 100.6 (unchanged w/w), yielding 3.9% and GEOROG 04/21 traded at 105.4 (-0.1% w/w), yielding 5.3%. Georgian Railway Eurobond (GRAIL) traded at a premium at 110.5 (+0.1 % w/w), yielding 5.5%. 

Georgian Sovereign Eurobond (GEORG) closed at 111.4 (-0.1% w/w) at 3.8% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 28.64/share (-7.79% w/w and +2.32% m/m). More than 828k shares traded in the range of GBP 28.02 – 31.11/share. Average daily traded volume was 102k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, lost 0.63% w/w and gained 2.70% m/m. The volume of BGEO shares traded was at 2.10% of its capitalization.

 TBC Bank Group (TBCG LN) closed the week at GBP 14.21 (-0.52% w/w and -5.27% m/m). More than 359k shares changed hands in the range of GBP 14.05 – 14.45/share. Averaged daily traded volume was 37k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.70/share (-2.37% w/w and +7.28% m/m). More than 87k shares were traded in the range of GBP 3.65 – 3.80/share.  Average daily traded volume was 28k in the last 4 weeks. The volume of GHG shares traded was at 0.07% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,150mn (US$ 441.8mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 7.9mn) certificates of deposit, with an average yield of 6.83% (up by 21bps from previous issue).

Ministry of Finance Treasury Notes: 5-year GEL 20.0mn (US$ 7.6mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on February 22, 2017. The weighted average yield was fixed at 9.181%. The nearest treasury security auction is scheduled for March 1, 2017, where GEL 50.0mn nominal value 1-year T-Bills will be sold.