Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

NPLs at 3.5% in June 2017

In June 2017, the banking sector loan portfolio increased 13.4% y/y after growing 14.3% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 17.9% y/y and 1.2% m/m to GEL 19.3bn (US$ 8.0bn). Deposits were up 15.5% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 17.4% y/y and up 2.8% m/m to GEL 16.8bn (US$ 7.0bn). Deposit dollarization reached 67.5% (+0.3ppts y/y and -1.0ppts m/m). NPLs stood at 3.5% in June 2017(-0.2% y/y and m/m).

NBG keeps its policy rate unchanged at 7.0%

At its meeting on 26 July 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 7.0%. The annual inflation rate rose to 7.1% in June 2017; Notably, the excise tax hikes on tobacco and fuels accounted for 2.6ppts in price level growth. NBG cited that increase in inflation is in line with existing forecast in 2Q17 due to one-off supply side pressures and the inflation will remain above the target rate of 4.0% throughout 2017. 

NBG also noted that there is no need for further tightening of monetary policy as the increase in inflation rate is temporary; as one-off factors affecting prices dissipate, inflation will decrease in 2H17 and get close to its target rate at the beginning of 2018. Given the absence of additional shocks in the medium term, the policy rate is expected to decrease to its neutral level based on NBG. The next committee meeting is scheduled for 6 September 2017.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.5% yield, trading at 102.3 (+0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 99.8 (unchanged w/w), yielding 11.1%. GOGC Eurobonds (GEOROG) were trading at 105.5 (+0.1% w/w), yielding 5.1%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 109.8 (unchanged w/w), yielding 5.5%. 

Georgian Sovereign Eurobonds (GEORG) closed at 111.9 (+0.1% w/w) at 3.4% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 34.40/share (-0.66% w/w and -0.92% m/m). More than 252k shares traded in the range of GBP 34.10 – 35.39/share. Average daily traded volume was 83k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.12% w/w and gained 1.29% m/m. The volume of BGEO shares traded was at 0.64% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.15 (-0.55% w/w and +4.06% m/m). More than 164 shares changed hands in the range of GBP 15.58 – 16.27/share. Averaged daily traded volume was 35k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.55/share (-1.39% w/w and +0.85% m/m). More than 42k shares were traded in the range of GBP 3.55 – 3.80/share.  Average daily traded volume was 11k in the last 4 weeks. The volume of GHG shares traded was at 0.03% of its capitalization

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,150mn (US$ 479.3mn). 

Ministry of Finance Treasury Bills:

3-month GEL 50.0mn (US$ 20.8mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on July 25, 2017. The weighted average yield was fixed at 7.052%. 

Ministry of Finance Treasury Notes:

5-year GEL 25.0mn (US$ 10.4mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on July 26, 2017. The weighted average yield was fixed at 8.130%. The nearest treasury security auction is scheduled for august 2, 2017, where GEL 40.0mn nominal value 1-year T-Bills will be sold.