Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 27.3% y/y in September 2017

In September 2017, exports increased 27.3% y/y to US$ 257.5mn, imports were up 5.5% y/y to US$ 684.8mn and the trade deficit narrowed 4.3% y/y to US$ 427.3mn, according to GeoStat. Overall in 9M17, the trade deficit was down 1.1% y/y at US$ 3.7bn as exports were up 28.3% to US$1.9bn, while imports increased 7.4% to US$ 5.6bn.

Increased exports of ferro-alloys (+206.8% y/y), cars (+52.8% y/y), wine (+89.7% y/y) and Petroleum (25.6x higher y/y) were the major commodities driving export growth in September 2017. In contrast copper (-9.1% y/y) and nuts (-45.9% y/y) exports were down.

Petroleum (+25.3% y/y), cars (+2.9% y/y), copper (+7.7% y/y), pharmaceuticals (-36.0% y/y) and phones (+15.9% y/y) represented the top 5 imported commodities in September 2017.

Producer price index up 2.0% m/m and up 13.4% y/y in September 2017

PPI for industrial goods was up 2.0% m/m in September 2017, according to GeoStat. A 2.2% price increase for manufacturing contributed the most to the overall index change as prices were up for manufacture of basic metals and fabricated metal products (+5.1% m/m) and food, beverages and tobacco (+2.4% m/m). Prices were also up for mining and quarrying (+2.9% m/m).

Annual PPI was up 13.4% in September 2017. Rising prices in manufacturing (+13.7% y/y) contributed the most to the overall index change. Prices were also up for supply of electricity, gas and water (+9.2% y/y) and for mining and quarrying (+22.4% y/y).

Money transfers up 24.2% y/y in September 2017

In September 2017, money transfers increased 24.2% y/y to US$ 124.4mn after growing 15.1% y/y in previous month, according to NBG. Money transfers were up from all major remitting countries: Russia (+16.6% y/y, 32.8% of total), Italy (+30.2% y/y, 10.5% of total), Greece (+21.0% y/y, 10.5% of total), USA (+3.2% y/y, 10.1% of total), Israel (+99.6% y/y, 9.3% of total) and Turkey (+28.6% y/y, 7.7% of total). In 9M17 money transfers were up 19.7% y/y to US$ 996.0mn.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.4% yield, trading at 102.9 (-0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (unchanged w/w), yielding 11.0%. GOGC Eurobonds (GEOROG) were trading at 106.5 (-0.2% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.8 (+0.1% w/w), yielding 4.9%.
Georgian Sovereign Eurobonds (GEORG) closed at 112.5 (+0.1% w/w) at 3.1% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 34.46/share (+2.41% w/w and +5.45% m/m). More than 267k shares traded in the range of GBP 33.37 – 34.82/share. Average daily traded volume was 51k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.60% w/w and gained 3.06% m/m. The volume of BGEO shares traded was at 0.68% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.02 (+4.10% w/w and +5.39% m/m). More than 214k shares changed hands in the range of GBP 16.47 – 17.62 share. Averaged daily traded volume was 30k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.50/share (+3.02% w/w and +5.26% m/m). More than 214k shares were traded in the range of GBP 3.35 – 3.57/share. Average daily traded volume was 32k in the last 4 weeks. The volume of GHG shares traded was at 0.16% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,100mn (US$ 442.8mn).

Ministry of Finance Treasury Notes:

10-year GEL 20.0mn (US$ 8.1mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on October 18, 2017. The weighted average yield was fixed at 9.087%. The nearest treasury security auction is scheduled for October 25, 2017, where GEL 20.0mn nominal value 5-year T-Notes will be sold.