20.Apr .2022 11:00

Galt&Taggart Published Weekly Market Watch

Galt&Taggart Published Weekly Market Watch
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Galt&Taggart published Weekly Market Watch.

Real GDP growth was 14.6% y/y in Feb-22

Georgia’s economy grew by 14.6% y/y in Feb-22, after a 18.0% y/y growth in previous month, based on Geostat’s rapid estimates. Cumulatively, in 2M22, growth came in at 16.3% y/y. In February, growth was recorded in manufacturing, transportation & storage, electricity & gas supply, hotels & restaurants, real estate, arts, entertainment & recreation and mining sectors.

NBG raised the key rate by 50bps to 11.0%

The NBG raised its key rate by 50bps to 11.0% on 30 March 2022, first time this year. Annual inflation was 13.7% in Feb-22 in Georgia and NBG expects inflation to reduce from Mar-22, mainly related to the elimination of base effect of government utility subsidy. However, the pace of reduction of inflation will be smaller vs previous forecast, as the sanctions imposed on Russia and supply-side disruptions have significantly increased oil products and foods prices on the world markets, which is expected to have a significant impact on inflation in Georgia. According to NBG forecast, despite the decline of inflation from March, it will remain above the 3.0% target during the year. NBG cited that monetary policy will keep a tightening bias until the risks of rising inflation expectations are sufficiently mitigated. The next committee meeting is scheduled for 11 May 2022.

Current account deficit reduced to 9.8% of GDP in 2021

Current account deficit reduced by 6.4% y/y to 9.8% of GDP in 2021, down from 12.4% of GDP in 2020, according to NBG. The improvement in the CA balance was supported by strong growth in transfers (up 27.2% y/y to US$ 2.3bn, 12.3% of GDP), followed by a recovery in service balance (reflecting the gradual rebound in tourism revenues, amounting to US$ 1.2bn in 2021, which is a 38.1% of 2019 level). Meanwhile, merchandize trade deficit, traditionally the major contributor to deficit creation, widened by 18.8% y/y to US$ 3.8bn, as exports increased by 27.4% y/y and imports were up 23.8% y/y. Notably, other investments at US$ 1.8bn (9.5% of GDP) and net FDI at US$ 830.8mn (4.4% of GDP) exceeded CA deficit by 1.4x y/y, resulting reserves accumulation by US$ 452.6mn in 2021.

Georgia and IMF Conclude Staff-level Agreement on a 3-year US$ 289mn program. The Fund-supported arrangement is subject to approval by the IMF Executive Board, which is expected to consider it in May 2022. The program would help Georgia maintain and further entrench macroeconomic and financial stability amidst back-to-back shocks and achieve stronger and more inclusive growth.

Money market

There were no treasury securities auction last week. The nearest treasury security auction is scheduled for April 5, 2022, where GEL 20.0mn nominal value 6-month T-bills and GEL 70.0mn nominal value 2-year Benchmark bonds will be sold.

Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 5.56% yield, trading at 100.54 (+0.69% w/w). Georgia Capital Eurobonds (GEOCAP) were trading at 96.58 (+0.82% w/w), yielding 8.07%.

Georgian Railway Eurobonds (GRAIL) traded at 88.09 (-0.06% w/w), yielding 6.35%. Georgian Sovereign Eurobonds (GEORG) closed at 86.49 (+2.11% w/w) at 6.61% yield to maturity.

Bank of Georgia Group (BGEO LN) shares closed at GBP 12.12/share (+2.71% w/w and -0.98% m/m). More than 367k shares traded in the range of GBP 11.82 - 13.00/share. Average daily traded volume was 88k in the last 4 weeks. The volume of BGEO shares traded was at 0.75% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 11.08/share (+6.13% w/w and -5.94% m/m). More than 315k shares changed hands in the range of GBP 10.26 - 11.76/share. Average daily traded volume was 65k in the last 4 weeks. The volume of TBCG shares traded was at 0.57% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 6.35/share (+5.66% w/w and +16.73% m/m). More than 376k shares traded in the range of GBP 6.03 - 6.43/share. Average daily traded volume was 77k in the last 4 weeks. The volume of CGEO shares traded was at 0.81% of its capitalization.