Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy -- Inflation was 2.7% y/y and 0.3% m/m in September 2018

Annual CPI inflation was 2.7% in September 2018 down from 3.1% in August 2018, according to GeoStat. Core inflation was 1.7% up from 1.5% recorded in previous month. Annual price changes were driven by price increases in transport (+6.2% y/y, +0.83ppts), food and non-alcoholic beverages (+1.8% y/y, +0.55ppts) and healthcare (+5.7% y/y, +0.48ppts) categories. On a monthly basis, there was 0.3% inflation in September 2018. Price increase in education (+3.7% m/m, +0.17ppts) was the major driver of monthly inflation dynamics.

Tourist arrivals up 9.1% y/y in September 2018

Total international visits to Georgia increased 5.7% y/y to 0.76mn in September 2018, according to the Ministry of Internal Affairs. A 9.1% y/y growth in tourist arrivals (0.54mn trips, 70.2% of total) drove the growth. Out of top countries, in September 2018, international visitors continued to increase from Russia (+27.8% y/y) and Azerbaijan (+9.8% y/y), while visitors were down from Armenia (-1.3% y/y), Turkey (-9.1% y/y) and Iran (-41.6% y/y). Total international visitors stood at 5.6mn (+12.9% y/y) in 9M18.

International reserves stood at US$ 3.2bn in September 2018
Gross international reserves were up 4.2% y/y and up 8.2% m/m to US$ 3.2bn in September 2018, according to NBG. Growth in reserves was attributed to FX auctions (total purchase of US$ 25mn in September), government FX operations and/or asset revaluation.

Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.5% yield, trading at 97.9 (-0.1% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. Georgia Capital Eurobonds (GEOCAP) were trading at 92.4 (-0.1% w/w), yielding 7.9%.

GOGC Eurobonds (GEOROG) were trading at 103.0 (-0.2% w/w), yielding 5.4%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 106.1 (-0.4% w/w), yielding 5.9%.

Georgian Sovereign Eurobonds (GEORG) closed at 105.1 (+0.1% w/w) at 4.7% yield to maturity. Georgia Eurobonds, YTM (%)
Equities

Bank of Georgia Group (BGEO LN) shares closed at GBP 17.34/share (+1.32% w/w and +1.59% m/m). More than 365k shares traded in the range of GBP 16.77 – 17.56/share. Average daily traded volume was 58k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, lost 1.77% w/w and lost 2.16% m/m. The volume of BGEO shares traded was at 0.41% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 11.48/share (+2.87% w/w and +10.49% m/m). More than 108k shares traded in the range of GBP 11.27 – 11.67/share. Average daily traded volume was 54k in the last 4 weeks. The volume of CGEO shares traded was at 0.28% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.80 (-0.24% w/w and +3.96% m/m). More than 67k shares changed hands in the range of GBP 16.56 – 17.66/share. Average daily traded volume was 17k in the last 4 weeks. The volume of TBCG shares traded was at 0.12% of its capitalization.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.20/share (flat w/w and -3.93% m/m). More than 145k shares were traded in the range of GBP 2.15 – 2.24/share. Average daily traded volume was 18k in the last 4 weeks. The volume of GHG shares traded was at 0.11% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,280mn (US$ 489.3mn).

Certificates of deposit: NBG sold 91-day, GEL 20mn (US$ 7.6mn) certificates of deposit, with an average yield of 7.14% (down 0.01ppts from previous issue).

Ministry of Finance Treasury Bills:

1-year GEL 40.0mn (US$ 15.3mn) Benchmark Bonds of Ministry of Finance were sold at the auction held at NBG on October 3, 2018. The weighted average yield was fixed at 7.136%. The nearest treasury security auction is scheduled for October 10, 2018, where GEL 40.0mn nominal value 2-year Benchmark Bonds and GEL 20.0mn nominal value 182-days T-Bills will be sold.