Galt&Taggart published a weekly market watch.
Inflation was 11.8% y/y and 2.5% m/m in Mar-22
Annual CPI inflation retreated to 11.8% in Mar-22 from a 13.7% in previous month, due to the elimination of base effect of government subsidy of utility bills. Notably, the pace of reduction of inflation was smaller vs previousforecast, as the sanctions imposed on Russia and supply-side disruptions significantly increased the price of oil products and foods on the world markets, affecting inflation in Georgia. Meanwhile, core inflation (non-food, non-energy, and non-tobacco) increased to 6.0% (+0.9ppts m/m) in March. By categories, annual inflation was mainly driven by price changes in food and non-alcoholic beverages (+17.8% y/y, +5.69ppts), transport (+21.6% y/y, +2.60ppts), housing, water, electricity, gas and other fuels (+8.4% y/y, +0.85ppts), restaurants and hotels (+13.1% y/y, +0.66ppts), and furnishing, household equipment and maintenance (+12.7% y/y, +0.65ppts) categories. On a monthly basis, there was a 2.5% inflation in Mar-22, reflecting price increase in transport (+8.9% m/m, 1.03ppts) and food and non-alcoholic beverages (+2.0% m/m, +0.68ppts) categories. We forecast average annual inflation at 8.1% in 2022.
Tourist arrivals recovered to 48.5% of 2019 level in Mar-22
Tourist arrivals (overnight stays) recovered to 48.5% of Mar-19 level, slightly down 55.4% recovery in Feb-22, due to Russia-Ukraine war.
Meanwhile, same-day arrivals, accounting for c.30% of total international arrivals pre-COVID, accelerated to 16.3% of Mar-19 level, from 10.3% in Jan-Feb 2022. That said, 188.4 thousand international visitors (up 236.9% y/y, tourists and same-day arrivals combined) traveled to Georgia in Mar22, with most visitors from Turkey (22.5% of total), followed by Russia (12.0% of total), and Armenia (11.7% of total). Notably, as in Feb-22, arrivals from Israel, Kazakhstan, Belarus, Saudi Arabia and Uzbekistan surpassed Mar-19 levels. Most visitors traveled to Georgia via land (56.8% of total), followed by air (41.9% of total). Overall, in 1Q22 tourist arrivals stood at 0.5mn persons (+294.6% y/y, 52.1% of 1Q19 level) and tourism revenues reached US$ 343.7mn by our estimates (+541.8% y/y, 59.4% of 1Q19 level). We expect 2022 tourism revenues to recover to 60-75% of 2019 level, revised down from our initial forecast of 85% recovery vs 2019.
International reserves at US$ 4.0bn in Mar-22
Gross international reserves decreased by 1.7% y/y to US$ 4.0bn in Mar22 according to NBG. On a monthly basis, the reserves were up by 0.9%
(+US$ 37.7mn). Notably, NBG intervined on FX market and sold US$ 39.6mn to limit GEL volatility in March.
Money market
Ministry of Finance T-Bills:
2-year GEL 70.0mn (US$ 22.7mn) Benchmark bonds were sold at the auction held at NBG on April 5, 2022. Total demand was c.2.0x higher and the weighted average yield was fixed at 10.730%, up by 0.845ppts from previous auction held in Mar-22. 6-month GEL 20.0mn (US$ 6.5mn) T-Bills were sold at the auction held at NBG on April 5, 2022. Total demand was 2.4x higher and the weighted average yield was fixed at 11.008%, up by 0.778ppts from previous auction held in Mar-22. The nearest treasury security auction is scheduled for April 12, 2022, where GEL 20.0mn nominal value 1-year T-Bills will be sold.
Fixed income
Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 5.54% yield, trading at 100.55 (+0.04% w/w). Georgia Capital
Eurobonds (GEOCAP) were trading at 96.30 (-0.30% w/w), yielding 8.26%. Georgian Railway Eurobonds (GRAIL) traded at 86.15 (-0.62% w/w),
yielding 6.78%. Georgian Sovereign Eurobonds (GEORG) closed at 86.63 (+0.22% w/w) at 6.58% yield to maturity.
Equities
Bank of Georgia Group (BGEO LN) shares closed at GBP 12.20/share (+0.66% w/w and +13.81% m/m). More than 332k shares traded in the range of GBP 11.56 - 12.40/share. Average daily traded volume was 72k in the last 4 weeks. The volume of BGEO shares traded was at 0.68% of its capitalization.
TBC Bank Group (TBCG LN) closed the week at GBP 11.48/share (+3.61% w/w and +22.52% m/m). More than 153k shares changed hands in the range of GBP 10.78 - 11.54/share. Average daily traded volume was 51k in the last 4 weeks. The volume of TBC shares traded was at 0.28% of its
capitalization.
Georgia Capital (CGEO LN) shares closed at GBP 6.45/share (+1.57% w/w and +34.80% m/m). More than 337k shares traded in the range of GBP 6.18- 6.60/share. Average daily traded volume was 74k in the last 4 weeks. The volume of CGEO shares traded was at 0.72% of its capitalization.
