Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 24.9% y/y in May 2017

In May 2017, exports increased 24.9% y/y to US$ 215.2mn, imports were up 3.8% y/y to US$ 633.2mn and the trade deficit narrowed 4.6% y/y to US$ 418.0mn according to GeoStat’s preliminary figures. In 5M17, trade deficit was up 3.4% y/y to US$ 1.9bn as exports increased 28.6% y/y, while imports were up 10.8% y/y. Detailed foreign trade statistics will be available on June 19, 2017. 

Money transfers up 24.2% y/y in May 2017

In May 2017, money transfers increased 24.2% y/y to US$ 115.4mn after growing 11.6% y/y in previous month, according to NBG. Money transfers were up from all major remitting countries: Russia (+21.8% y/y, 32.8% of total), USA (+22.7% y/y, 10.5% of total), Greece (+8.9% y/y, 10.2% of total), Italy (+14.5% y/y, 10.1% of total), and Turkey (+32.9% y/y, 8.7% of total). In 5M17 money transfers were up 20.3% y/y to US$ 511.2mn.

NBG keeps its policy rate unchanged at 7.0%

At its meeting on 14 June 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 7.0%, after increasing it by 25 basis points last month. The decision is based on the macroeconomic forecast, according to which the inflation is expected to be above 4.0% target rate during 2017 due to one-offs. NBG commented that in the last few months, as a result of excise tax increases on tobacco and fuels, the inflation rate increased and reached 6.6% in May 2017. NBG however added that the increase in inflation is temporary and will start to decline in 2H17 and will get close to its target rate of 3.0% in 2018. NBG also noted that inflation expectations have been declining lately and there is no need of the further policy tightening given the absence of additional factors affecting price level. The next committee meeting is scheduled for 26 July 2017.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.6% yield, trading at 101.8 (-0.1% w/w).   Bank of Georgia GEL- denominated Eurobonds (GEBGG) were trading at 100.3 (-0.2% w/w), yielding 10.9%. GOGC Eurobonds (GEOROG) were trading at 105.4 (-0.2% w/w), yielding 5.2%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.7 (unchanged w/w), yielding 5.3%. 

Georgian Sovereign Eurobonds (GEORG) closed at 112.0 (+0.1% w/w) at 3.5% yield to maturity.


BGEO Group (BGEO LN) shares closed at GBP 35.96/share (-3.13% w/w and +1.15% m/m). More than 684k shares traded in the range of GBP 34.47 – 37.63/share. Average daily traded volume was 92k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.14% w/w and lost 0.39% m/m. The volume of BGEO shares traded was at 1.73% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 17.23 (-5.23% w/w and +5.97% m/m). More than 276k shares changed hands in the range of GBP 16.88 – 19.04/share. Averaged daily traded volume was 205k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.83/share (+9.43% w/w and +2.89% m/m). More than 546k shares were traded in the range of GBP 3.48 – 3.83/share.  Average daily traded volume was 95k in the last 4 weeks. The volume of GHG shares traded was at 0.41% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,350mn (US$ 560.1mn). 

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 8.3mn) certificates of deposit, with an average yield of 7.11% (unchanged from previous issue).

Ministry of Finance Treasury Notes: 2-year GEL 40.0mn (US$ 16.6mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on June 14, 2017. The weighted average yield was fixed at 8.00%. The nearest treasury security auction is scheduled for June 21, 2017, where GEL 50.0mn nominal value 1-year T-Bills will be sold. 

Ministry of Finance Treasury Bills: 182-days GEL 20.0mn (US$ 8.3mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on June 14, 2017. The weighted average yield was fixed at 7.210%.