Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Tourist arrivals up 43.0% y/y in June 2017

Total international arrivals to Georgia increased 28.5% y/y to 0.67mn visitors in June 2017, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 43.0% y/y to 0.33mn persons (49.3% of total) in June after posting a 19.6% y/y growth in May 2017. Out of top countries by arrivals, in June 2017, visitors continued to increase from Armenia (+28.8% y/y), Russia (+45.0% y/y), Iran (+222.1% y/y) and Azerbaijan (+16.6% y/y), while arrivals were down from Turkey (-6.4% y/y). Arrivals from EU were up 27.0% y/y to over 34,500 visitors. In 1H17 international arrivals increased 13.4% y/y to 3.0mn visitors, while tourist arrivals increased 29.1% y/y to 1.3mn. 

Inflation was up 7.1% y/y and down 0.4% m/m in June 2017

The annual CPI inflation was 7.1% in June 2017 after 6.6% inflation in previous month, according to GeoStat. Core inflation was 4.5% in June, up from 3.7% in previous month. Overall price changes were driven by price increases in food and non-alcoholic beverages (+9.5% y/y, +2.87ppts), transport (+15.3% y/y, +1.92ppts), and alcoholic beverages and tobacco (+18.2% y/y, +1.18ppts) categories. On a monthly basis, there was 0.4% deflation in June 2017. Price decrease in food and non-alcoholic beverages (-1.5% m/m, -0.45ppts) and price increase in alcoholic beverages and tobacco (+2.5% m/m, +0.17ppts) categories were the major drivers of monthly Inflation dynamics.

International reserves up 3.5% y/y in June 2017

Gross international reserves were up 3.5% y/y to US$ 3.0bn in June 2017, while reserves were up 4.6% on monthly bases, according to NBG. The increase in reserves was related to FX interventions by NBG, with a total purchase of US$ 70mn in June 2017.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.7% yield, trading at 101.6 (-0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 99.8 (-0.5 w/w), yielding 11.1%. GOGC Eurobonds (GEOROG) were trading at 104.7 (-0.8% w/w), yielding 5.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 109.4 (-0.7% w/w), yielding 5.6%. 

Georgian Sovereign Eurobonds (GEORG) closed at 111.4 (-0.4% w/w) at 3.6% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 36.74/share (+5.15% w/w and +0.49% m/m). More than 474k shares traded in the range of GBP 34.80 – 37.39/share. Average daily traded volume was 116k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.11% w/w and lost 1.70% m/m. The volume of BGEO shares traded was at 1.20% of its capitalization.

 TBC Bank Group (TBCG LN) closed the week at GBP 16.39 (+3.47% w/w and -5.53% m/m). More than 819k shares changed hands in the range of GBP 15.85 – 16.75/share. Averaged daily traded volume was 111k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.70/share (+4.01% w/w and +6.02% m/m). More than 79k shares were traded in the range of GBP 3.65 – 3.80/share.  Average daily traded volume was 117k in the last 4 weeks. The volume of GHG shares traded was at 0.06% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,100mn (US$ 458.9mn). 

Ministry of Finance Treasury Bills: 1-year GEL 50.0mn (US$ 20.8mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on July 12, 2017. The weighted average yield was fixed at 7.282%. The nearest treasury security auction is scheduled for July 12, 2017, where GEL 20.0mn nominal value 182-days T-Bills and GEL 45.0mn nominal value 2-year T-Notes will be sold.