The stock market tends to discount the future, the real skill of the seasoned investor is the ability to distinguish between “noise” and true fundamental concerns that can lead to a permanent re-pricing of company shares, currencies or even a country’s investment security & potential.
The external value of a country’s currency is a barometer of the global financial market’s assessment of the country and its risks & opportunities.
According to Bloomberg data, the GEL Georgia Lari is among the world worst performing currencies on a one-month basis. The last 5 days the Lari is the second worst performing currency in the world.
Georgia plans to sell GEL75 million ($27.18million) of 8.375% bonds due July 25, 2031 in an auction on May 21.
In the global FX market, the GEL is trading at 2.75 levels against the USD and at 2.9982 against the euro, European Union common currency.
World famous investment manager and USA democratic party donor and early supporter of Barak Obama, George Soros famously opined, that the way to make money in global financial markets is to understand whether the market and investors play the game by the rules, or whether there are changes in the rules of the game.
The question for investors in Georgia assets is whether the recent developments are noise or a true and fundamental change in the real & perceived risk of Georgia assets.
For strategic asset allocation investors, it is important to note & remember that Georgian bank stocks have strongly outperformed its benchmark index and other country’s leading banks.
TBC 5-year total return stands at +97.44% and Bank of Georgia group +216.33%.
The FSTE all share bank index performance during the last 5 years stands at +37.47%.
The London listed share prices of BGEO and TBC came under intense selling pressure after the global media and television sets showed protestations against the so-called new Russia law in the republic of Georgia. Since May 1st, TBC has dropped by -23.23% and Bank of Georgia group by – 23.6%.
The question for investors is whether share-price performance reflects sentiment, rather than fundamentals.
In terms of valuation and according to Bloomberg data, TBC is valued at 4.3x P/E with a current indicative dividend yield of 7.75%. the current analyst community consensus view on the stock and company is still buy with a 12-month TP target price of GBP 41.30 implying potential gain of +52.4% from current levels. Bloomberg consensus ratings currently stand at Buys 100% holds 0% and Sell 0%.
BGEO Bank of Georgia group is currently valued at around 4x P/E with a current indicative dividend yield of 5.61%. the current analyst community consensus view on the stock and company is still buy with a 12-month TP target price of GBP 62.60 implying potential gain of +49.8% from current levels. Bloomberg consensus ratings currently stand at Buys 100% holds 0% and sell 0%.
On May 13th bank of Georgia Group confirmed its proposed final dividend for 2023.
BGEO proposed a final dividend of GEL4.94, approximately GBP1.47, per ordinary share.
This will bring the total dividend for the year to GEL8.00 per share, representing a 4.6% increase from GEL7.65 paid in 2022.
The dividend remains subject to approval by shareholders at the upcoming annual general meeting on June 17.
Successful investing as part of a globally well diversified investment or retirement portfolio is often about time in the market rather than timing the markets.
USA president Joseph Robinette Biden Jr. reminded the world and university students at Morehouse College commencement speech in Atlanta on May 19th that peaceful demonstrations are important and vital part of USA & indeed world history and are even good for the global capital market and investors.
An old sign at the NYSE New York stock exchange stated; the world puts it stock in us. America allowed a free press and peaceful demonstrations.
The country of Georgia offers investment opportunities due to its strategic location, economic reforms, and efforts to attract foreign investment. Potential investors should conduct thorough due diligence, consider diversifying their investments, and stay informed about the political and economic landscape to mitigate these risks.
Rainer Michael Preiss, Partner & Portfolio Strategist at Das Family Office in Singapore
