11.Jul .2022 13:00

Galt&Taggart Published Weekly Market Watch

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

Inflation retreated to 12.8% y/y in Jun-22

Annual CPI inflation retreated to 12.8% in Jun-22 from a 13.3% inflation in previous month, mainly due to the last year’s high base effect. Core inflation (non-food, non-energy, and non-tobacco) reduced slightly to 6.6% (-0.1ppts m/m) in June. By categories, annual inflation was mainly driven by price changes in food and non-alcoholic beverages (+21.8% y/y, 6.86ppts), transport (+19.4% y/y, 2.34ppts), housing, water, electricity, gas and other fuels (+13.0% y/y, 1.31ppts), restaurants and hotels (+14.0% y/y, 0.64ppts), alcoholic beverage and tobacco (+7.9% y/y, 0.53ppts), and furnishing, household equipment and maintenance (+8.7% y/y, 0.45ppts) categories. On a monthly basis, there was a 0.2% inflation in Jun-22, after a 1.1% inflation in May-22.

Tourist arrivals recovery accelerated further in Jun-22

The tourism sector recovery strengthened further in Jun-22 as tourist arrivals recovered at 64.1% of Jun-19 level for the first time in two years, up from 62.3% recovery in previous month. Same-day arrivals also accelerated in June, recovering at 33.3% of Jun-19 level, up from a 28.6% in May-22. That said, 387.8 thousand international visitors (up 164.4% y/y, tourists and same-day arrivals combined) traveled to Georgia in Jun-22, with most visitors from Russia (23.3% of total), followed by Turkey (16.0% of total), and Armenia (16.0% of total). Notably, arrivals from Kazakhstan, Belarus, and Uzbekistan surpassed Jun-19 levels. Most visitors traveled to Georgia via land (65.2% of total), followed by air (33.9% of total). Overall, in 1H22 tourist arrivals stood at 1.2mn persons (+186.3% y/y, 56.8% of 1H19 level) and tourism revenues reached US$ 1.2bn by our estimates (+289.5% y/y, 80.2% of 1H19 level). We expect 2022 tourism revenues to recover at 85% of 2019 level, however considering strong revenues in May-June, full recovery in 2022 is also likely.

International reserves at US$ 3.9bn in Jun-22

Gross international reserves increased by 0.1% y/y to US$ 3.9bn in Jun22 according to NBG. On a monthly basis, the reserves were up by 1.7% (+US$ 67.3mn). Change in reserves was attributed to the government and banking sector FX operations, and/or asset revaluation.

Money market

Ministry of Finance T-Bills:
2-year GEL 80.0mn (US$ 27.8mn) Benchmark bonds were sold at the auction held at NBG on July 5, 2022. Total demand was c.2.7x higher and the weighted average yield was fixed at 10.077%, down by 0.247ppts from previous auction held in Jun-22. 6-month GEL 20.0mn (US$ 7.0mn) T-Bills were sold at the auction held at NBG on July 5, 2022. Total demand was 2.0x higher and the weighted average yield was fixed at 10.523%, down by 0.122ppts from previous auction held in Jun-22. The nearest treasury security auction is scheduled for July 12, 2022, where GEL 30.0mn nominal value 1-year T-Bills will be sold.

Fixed income

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.09% yield, trading at 99.94 (+1.13% w/w). Georgia Capital Eurobonds (GEOCAP) were trading at 95.45 (-0.33% w/w), yielding 9.13%. Georgian Railway Eurobonds (GRAIL) traded at 84.43 (-0.26% w/w), yielding 7.28%.

Georgian Sovereign Eurobonds (GEORG) closed at 83.22 (+0.11% w/w) at 7.98% yield to maturity.

Bank of Georgia Group (BGEO LN) shares closed at GBP 13.92/share (+4.04% w/w and -14.18% m/m). More than 262k shares traded in the range of GBP 13.00 - 13.98/share. Average daily traded volume was 105k in the last 4 weeks. The volume of BGEO shares traded was at 0.53% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 12.32/share (+0.65% w/w and -14.92% m/m). More than 84k shares changed hands in the range of GBP 11.68 - 12.78/share. Average daily traded volume was 35k in the last 4 weeks. The volume of TBCG shares traded was at 0.15% of its capitalization.

Georgia Capital (CGEO LN) shares closed at GBP 5.84/share (-2.18% w/w and -12.57% m/m). More than 217k shares traded in the range of GBP 5.81 - 6.06/share. Average daily traded volume was 44k in the last 4 weeks. The volume of CGEO shares traded was at 0.47% of its capitalization.