Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Tourism revenues up 27.0% y/y in 2017

Tourism revenues were up 27.0% y/y to US$ 2.75bn in 2017, according to NBG’s preliminary figures, reflecting a surge in tourist arrivals. In 2017, total international arrivals increased 18.8% y/y to 7.6mn visitors, while tourist arrivals increased 27.9% y/y to 3.5mn.

Georgia’s Tax Code exempts taxes on capital gain and interest income

In the context of Georgia’s capital market development, Georgia’s amended Tax Code provides for preferential treatment of capital gain and interest income on debt and equity instruments issued by a resident legal entity through a public offering and admitted for trading on an organized market recognized by the National Bank of Georgia. As of January 2018, resident and non-resident individuals and non-resident legal entities are exempt from personal and corporate income taxes on capital gain from debt and equity securities and on interest income from debt securities. For the latter, the debt securities should be issued by a resident legal entity through a public offering in Georgia and admitted for trading on an organized market recognized by the National Bank of Georgia. In addition, the tax exemption on interest income from debt securities will apply to securities issued before January 1, 2023.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 4.9% yield, trading at 105.3 (+0.7% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. GOGC Eurobonds (GEOROG) were trading at 107.8 (+0.2% w/w), yielding 4.2%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 112.8 (+0.4% w/w), yielding 4.7%.

Georgian Sovereign Eurobonds (GEORG) closed at 111.7 (-0.6% w/w) at 3.1% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 37.74/share (+3.57% w/w and +10.09% m/m). More than 358k shares traded in the range of GBP 35.96 – 38.84/share. Average daily traded volume was 48k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 0.21% w/w and gained 4.06% m/m. The volume of BGEO shares traded was at 0.91% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.14 (+3.50% w/w and +3.75% m/m). More than 109k shares changed hands in the range of GBP 15.80 – 17.40 share. Averaged daily traded volume was 14k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.45/share (-2.82% w/w and -0.58% m/m). More than 104k shares were traded in the range of GBP 3.45 – 3.69/share. Average daily traded volume was 13k in the last 4 weeks. The volume of GHG shares traded was at 0.08% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,150mn (US$ 466.1mn).

Ministry of Finance Treasury Notes:

2-year GEL 40.0mn (US$ 15.5mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on January 10, 2018. The weighted average yield was fixed at 7.663%. The nearest treasury security auction is scheduled for January 17, 2018, where GEL 25.0mn nominal value 10-year T-Notes will be sold.

Ministry of Finance Treasury Bills:

182-days GEL 20.0mn (US$ 7.8mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on January 10, 2018. The weighted average yield was fixed at 7.381%.