Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

FDI up 5.2% y/y in 2016

FDI in Georgia stood at US$ 1,645.4mn (+5.2% y/y) in 2016, according to GeoStat’s preliminary figures. The transport and communication sector was the largest FDI recipient at US$ 645.0mn (+10.3% y/y, 39.2% of total) in 2016, followed by the energy sector at US$ 202.8mn (+63.9% y/y, 12.3% of total), construction US$ 163.5mn (+47.7% y/y, 9.9% of total), and the financial sector at US$ 135.8mn (-23.9% y/y, 8.25% of total). Azerbaijan topped the list of investors with US$ 578.4mn, followed by Turkey at US$ 272.3mn, United Kingdom at US$ 120.8mn, and Netherlands at US$ 95.4mn. 

NBG keeps its policy rate unchanged at 6.75%

At its meeting on 7 March 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 6.75%.  NBG still considers appropriate to increase the policy rate to 7.0% in 1H17, subject to more certainty on recent dynamics affecting prices. Annual inflation came in at 5.5% in February 2017 and central bank expects price level to remain above the target level of 4.0% in 2017. Consumer prices were mainly affected by the increase in certain commodity prices on world markets, the increase in the excise tax, and the appreciation of US$ in previous period. Meanwhile core inflation (non-food, non-energy) and prices on domestic goods and services remain at low levels. NBG expects inflation to decrease below its target in 2018, when one-off factors affecting price level dissipate. The next committee meeting is scheduled for 2 May 2017. 

International reserves up 14.6% y/y in February 2017 

Gross international reserves were up 14.6% y/y to US$ 2.8bn in February 2017, while reserves were almost flat on a monthly bases (-0.6% m/m, -US$ 16.0mn), according to NBG. The increase in reserves was related to government FX operations and/or asset revaluation.

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 100.7 (+0.1% w/w), yielding 2.8% and GEOROG 04/21 traded at 105.3 (-0.2% w/w), yielding 5.3%. Georgian Railway Eurobond (GRAIL) traded at a premium at 110.1 (-0.3 % w/w), yielding 5.5%.

Georgian Sovereign Eurobond (GEORG) closed at 110.6 (-0.5% w/w) at 4.0% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 29.87/share (+1.95% w/w and -3.33% m/m). More than 439k shares traded in the range of GBP 28.35 – 30.03/share. Average daily traded volume was 113k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.42% w/w and gained 1.31% m/m. The volume of BGEO shares traded was at 1.11% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 14.08 (-0.49% w/w and -2.56% m/m). More than 89k shares changed hands in the range of GBP 13.76 – 14.28/share. Averaged daily traded volume was 50k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.59/share (-1.17% w/w and +4.81% m/m). More than 51k shares were traded in the range of GBP 3.43 – 3.70/share.  Average daily traded volume was 32k in the last 4 weeks. The volume of GHG shares traded was at 0.04% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,240mn (US$ 504.1mn).

Ministry of Finance Treasury Notes: 182-days GEL 20.0mn (US$ 8.1mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on March 7, 2017. The weighted average yield was fixed at 7.128%.

Ministry of Finance Treasury Notes: 2-year GEL 30.0mn (US$ 12.2mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on March 7, 2017. The weighted average yield was fixed at 8.253%.