Galt&Taggart published Weekly Market Watch. Accoridng to the document, the economic growth in Georgia accelerated to 11.0% y/y in Dec-22, after a 9.3% y/y growth in previous month, based on Geostat’s rapid estimates. Cumulatively, real growth stood at 10.1% y/y in 2022, in line with our expectation. The observed growth in December was largely driven by the construction, manufacturing, transportation and storage, financial, trade and hospitality sectors. Meanwhile, real estate operations, professional activities and utilities sectors contracted. We forecast real GDP growth at 4.8% in 2023 and 5.0% in 2024.
Inflation eased to 9.4% in Jan-23
Annual CPI inflation eased to 9.4% in Jan-23 from a 9.8% inflation in previous month. Contrary, core inflation (non-food, non-energy, and nontobacco) increased to 7.7% (+1.0ppts m/m) in January. By categories, annual inflation was mostly driven by price changes in food and nonalcoholic beverages (+15.0% y/y, 5.03ppts), housing, water, electricity, gas and other fuels (+13.1% y/y, 1.38ppts), transport (+5.2% y/y, 0.63ppts), alcoholic beverages and tobacco (+8.7% y/y, 0.58ppts), restaurants and hotels (+14.7% y/y, 0.58ppts), furnishings, household equipment and maintenance (+10.1% y/y, 0.52ppts) and healthcare (-3.2% y/y, -0.33ppts) categories. On a monthly basis, there was a 0.8% inflation in Jan-23, driven by price increase in food and non-alcoholic beverages (+1.4% m/m, 0.46ppts) category. We forecast average annual inflation at 5.2% in 2023 and 3.8% in 2024.
NBG keeps key rate unchanged at 11.0%
The NBG kept its key rate unchanged at 11.0% on 1 February 2023 meeting. According to the NBG’s updated forecast, inflation will continue to decline and reach the target level in 2H23, due to the gradual neutralization of external factors and a stronger GEL along with the tight monetary policy and fiscal consolidation. However, the regulator warns that the current geopolitical situation still brings uncertainty and upward risks to inflation. The NBG also underlines inflationary pressure due to local wage growth outpacing labor productivity growth. Therefore, the NBG plans to keep a tight monetary policy throughout the year and begin monetary easing once inflation approaches the target. The next committee meeting is scheduled for 29 March 2023.
Ministry of Finance T-Bills:
5-year GEL 90.0mn (US$ 34.1mn) Benchmark bonds were sold at the auction held at NBG on January 31, 2023. Total demand was 2.0x higher and the weighted average yield was fixed at 8.679%, down by 0.147ppts from previous auction held in Dec-22. The nearest treasury security auction is scheduled for February 7, 2023, where GEL 20.0mn nominal value 6-month T-bills and GEL 40.0mn nominal value 2-year Benchmark bonds will be sold.
Fixed income
Corporate Eurobonds: Georgia Capital Eurobonds (GEOCAP) were trading at 97.22 (+0.46% w/w), yielding 8.85%.
Georgian Railway Eurobonds (GRAIL) traded at 88.94 (+0.55% w/w), yielding 6.47%.
Georgian Sovereign Eurobonds (GEORG) closed at 92.41 (+0.27% w/w) at 5.35% yield to maturity.
Equities
Bank of Georgia Group (BGEO LN) shares closed at GBP 27.50/share (+2.42% w/w and +5.16% m/m). More than 259k shares traded in the range of GBP 26.00 - 27.65/share. Average daily traded volume was 46k 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 24.85/share (+5.30% w/w and +9.23% m/m). More than 187k shares changed hands in the range of GBP 23.40 - 24.95/share. Average daily traded volume was 38k in the last 4 weeks. The volume of TBCG shares traded was at 0.34% of its
capitalization.
Georgia Capital (CGEO LN) shares closed at GBP 7.57/share (+0.26% w/w and +4.27% m/m). More than 152k shares traded in the range of GBP 7.35- 7.65/share. Average daily traded volume was 28k in the last 4 weeks. The volume of CGEO shares traded was at 0.33% of its capitalization.
