Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Real GDP grew 4.6% y/y in June 2017

Georgia’s economy expanded 4.6% y/y in June 2017, after growing 5.3% y/y in previous month, according to GeoStat’s rapid estimates. Overall, in 1H17 GDP growth was 4.5% y/y. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Tourist arrivals up 32.9% y/y in July 2017

Total international arrivals to Georgia increased 28.5% y/y to 0.98mn visitors in July 2017, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 32.9% y/y to 0.52mn persons (52.9% of total) in July after posting a 43.0% y/y growth in June 2017. Out of top countries by arrivals, in July 2017, visitors continued to increase strongly from Armenia (+25.4% y/y), Russia (+60.4% y/y), Iran (+85.8% y/y), Azerbaijan (+13.8% y/y), and Ukraine (+16.3% y/y). Arrivals from EU were up 21.4% y/y to over 45,500 visitors. In 7M17 international arrivals increased 16.8% y/y to 4.0mn visitors, while tourist arrivals increased 30.2% y/y to 1.8mn.

Inflation was up 6.0% y/y and down 0.9% m/m in July 2017

The annual CPI inflation retreated to 6.0% in July 2017 from 7.1% inflation in previous month, according to GeoStat. Core inflation was 4.3% in July, down from 4.5% in previous month. Overall price changes were driven by price increases in food and non-alcoholic beverages (+7.1% y/y, +2.14ppts), transport (+12.6% y/y, +1.61ppts), and alcoholic beverages and tobacco (+17.3% y/y, +1.13ppts) categories. On a monthly basis, there was 0.9% deflation in July 2017. Price decrease in food and non-alcoholic beverages (-2.6% m/m, -0.78ppts) and transport (-1.0% m/m, -0.14ppts) categories were the major drivers of monthly Inflation dynamics.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.5% yield, trading at 102.3 (unchanged 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 105.7 (+0.2% w/w), yielding 5.0%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.0 (unchanged w/w), yielding 5.4%. 

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

Equities

BGEO Group (BGEO LN) shares closed at GBP 36.15/share (+5.09% w/w and -0.17% m/m). More than 308k shares traded in the range of GBP 34.27 – 36.89/share. Average daily traded volume was 75k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 1.25% w/w and gained 3.49% m/m. The volume of BGEO shares traded was at 0.78% of its capitalization.

 TBC Bank Group (TBCG LN) closed the week at GBP 17.09 (+5.82% w/w and +4.08% m/m). More than 207k shares changed hands in the range of GBP 16.10 – 17.19/share. Averaged daily traded volume was 35k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.57/share (+0.67% w/w and -3.41% m/m). More than 68k shares were traded in the range of GBP 3.50 – 3.80/share.  Average daily traded volume was 12k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 960mn (US$ 400.8mn). 

Ministry of Finance Treasury Bills:

1-year GEL 40.0mn (US$ 16.7mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on August 2, 2017. The weighted average yield was fixed at 7.194%. The nearest treasury security auction is scheduled for august 9, 2017, where GEL 20.0mn nominal value 2-year T-Notes and GEL 20.0mn nominal value 182-days T-Bills will be sold.