Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

FDI down 14.3% y/y in 2Q17

FDI in Georgia stood at US$ 346.6mn (-14.3% y/y) in 2Q17, according to GeoStat’s preliminary figures. Similar to previous quarters, the transport and communications sector was the largest FDI recipient at US$ 130.4mn (-25.1% y/y, 37.6% of total) in 2Q17, followed by the construction at US$ 70.0mn (+408.5 y/y, 20.2% of total). Azerbaijan topped the list of investors with US$ 126.9mn, followed by Netherlands at US$ 42.9mn, Turkey at US$ 39.3mn, and United Kingdom at US$ 31.5mn. 

Tourist arrivals up 27.2% y/y in August 2017

Total international arrivals to Georgia increased 27.4% y/y to 1.08mn visitors in August 2017, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 27.2% y/y to 0.57mn persons (53.1% of total) in August after posting a 32.9% y/y growth in July 2017. Out of top countries by arrivals, in August 2017, visitors continued to increase from Armenia (+11.7% y/y), Russia (+27.8% y/y), Iran (+85.1% y/y), Azerbaijan (+18.5% y/y) and Turkey (+42.2% y/y). Arrivals from EU were up 29.8% y/y to over 36,500 visitors. In 8M17 international arrivals increased 18.9% y/y to 5.1mn visitors, while tourist arrivals increased 29.4% y/y to 2.4mn. 

Inflation was 5.7% y/y and 0.2% m/m in August 2017

The annual CPI inflation was 5.7% in August 2017 after 6.0% inflation in previous month, according to GeoStat. Core inflation was 4.3% in August, same as in previous month. Overall price changes were driven by price increases in food and non-alcoholic beverages (+6.2% y/y, +1.88ppts), transport (+11.6% y/y, +1.46ppts), and alcoholic beverages and tobacco (+17.5% y/y, +1.14ppts) categories. On a monthly basis, there was 0.2% price increase in August 2017. Price increase in housing, water, electricity, gas and other fuels (+1.9% m/m, +0.17ppts) and price decrease in transport category (-0.7% m/m, -0.09ppts) were the major drivers of monthly Inflation dynamics.

International reserves up 0.9% y/y in August 2017

Gross international reserves were up 0.9% y/y to US$ 2.9bn in August 2017, while reserves were down 0.8% on a monthly basis, according to NBG. The annual increase in reserves was partly related to FX interventions by NBG, with a total purchase of US$ 40mn in August 2017.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.3% yield, trading at 103.4 (+0.6% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (+0.2% w/w), yielding 11.1%. GOGC Eurobonds (GEOROG) were trading at 106.9 (+0.4% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.9 (+1.0% w/w), yielding 5.0%. 

Georgian Sovereign Eurobonds (GEORG) closed at 112.7 (+0.6% w/w) at 3.1% yield to maturity.

Equities

BGEO Group (BGEO LN) shares closed at GBP 33.17/share (-4.30% w/w and -7.84% m/m). More than 256k shares traded in the range of GBP 32.92 – 34.83/share. Average daily traded volume was 60k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.91% w/w and lost 1.72% m/m. The volume of BGEO shares traded was at 0.65% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.20 (+0.12% w/w and -0.61% m/m). More than 131k shares changed hands in the range of GBP 15.80 – 16.85/share. Averaged daily traded volume was 22k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.50/share (+0.68% w/w and +0.21% m/m). More than 39k shares were traded in the range of GBP 3.40 – 3.65/share.  Average daily traded volume was 9k 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 830mn (US$ 334.7mn). 

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.0mn) certificates of deposit, with an average yield of 7.11% (down 1 bps from previous issue).

Ministry of Finance Treasury Bills:

1-year GEL 20.0mn (US$ 8.0mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on September 6, 2017. The weighted average yield was fixed at 7.160%. The nearest treasury security auction is scheduled for September 13, 2017, where GEL 20.0mn nominal value 2-year T-Notes and GEL 20.0mn nominal value 182-days T-Bills will be sold.