Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 38.3% y/y in October 2017

In October 2017, exports increased 38.3% y/y to US$ 262.8mn, imports were up 10.4% y/y to US$ 730.8mn and the trade deficit narrowed 0.9% y/y to US$ 468.0mn, according to GeoStat. Overall in 10M17, the trade deficit was down 0.9% y/y at US$ 4.2bn as exports were up 29.4% y/y to US$ 2.2bn, while imports increased 7.8% y/y to US$ 6.4bn.

In October 2017, copper (+92.3% y/y), cars (+44.6% y/y), wine (+40.6% y/y), ferro-alloys (+60.1% y/y) and pharmaceuticals (+35.6% y/y) were the top 5 exported commodities; 26.1% of exports were directed to the EU (+6.1% y/y), 48.0% were directed to the CIS (+64.0% y/y) and 25.9% to other countries (+40.4% y/y).

Petroleum (+7.7% y/y), cars (-12.2% y/y), pharmaceuticals (+31.2% y/y), gases (-12.2% y/y) and phones (+6.7% y/y) represented the top 5 imported commodities in October 2017.

Producer price index up 1.1% m/m and up 13.3% y/y in October 2017

PPI for industrial goods was up 1.1% m/m in October 2017, according to GeoStat. A 0.9% price increase for manufacturing contributed the most to the overall index change as prices were up for food, beverages and tobacco (+1.3% m/m), rubber and plastic products (+7.3% m/m) and chemical products (+1.6% m/m).
Annual PPI was up 13.3% in October 2017. Rising prices in manufacturing (+13.3% y/y) contributed the most to the overall index change. Prices were also up for supply of electricity, gas and water (+9.5% y/y) and for mining and quarrying (+24.3% y/y).

NPLs at 3.4% in October 2017

In October 2017, the banking sector loan portfolio increased 16.6% y/y after growing 16.0% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 24.4% y/y and 4.0% m/m to GEL 21.1bn (US$ 8.1bn). Deposits were up 16.1% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 21.6% y/y and up 3.5% m/m to GEL 19.0bn (US$ 7.3bn). Deposit dollarization reached 66.4% (-3.3ppts y/y and +1.0ppts m/m). NPLs stood at 3.4% in October 2017 (-0.5ppts y/y and +0.3ppts m/m).

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.3% yield, trading at 103.6 (+0.4% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.8%. GOGC Eurobonds (GEOROG) were trading at 107.5 (+0.1% w/w), yielding 4.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 112.0 (+0.2% w/w), yielding 4.8%.

Georgian Sovereign Eurobonds (GEORG) closed at 112.3 (-0.2% w/w) at 3.0% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 33.40/share (+0.81% w/w and -5.01% m/m). More than 307k shares traded in the range of GBP 32.51 – 33.69/share. Average daily traded volume was 73k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.86% w/w and lost 0.72% 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 16.26 (-2.63% w/w and -6.01% m/m). More than 102k shares changed hands in the range of GBP 16.25 – 17.00 share. Averaged daily traded volume was 18k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.40/share (-1.45% w/w and -5.56% m/m). More than 52k shares were traded in the range of GBP 3.40 – 3.50/share. Average daily traded volume was 18k in the last 4 weeks. The volume of GHG shares traded was at 0.04% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,040mn (US$ 383.2mn).

Ministry of Finance Treasury Securities:

The nearest treasury security auction is scheduled for November 29, 2017, where GEL 20.0mn nominal value 5-year T-Notes will be sold.