Georgian Weekly Digest 31 July 2017

Economy

The National Bank of Georgia (NBG) kept its policy rate unchanged at 7.0%. The central bank noted that a spike in inflation in Q2 2017 was in line with initial forecasts and was mainly driven by one-off items such as increase in certain excise taxes. Annual CPI inflation in June 2017 was 7.1%, while NBG’s inflation target for the year is 4.0%. The NBG expects a gradual decrease of annual inflation by the end of the year and convergence with its target in the first half of 2018.

Central bank also highlighted improvements in the underlying economic activity, including rise in export of goods and services, improved flow of remittances and resulting increase in consumption. Despite these improvements, NBG believes that the economic growth is still below the medium-term potential and therefore domestic demand growth does not create upward pressure on prices.

Commercial banks’ loan portfolio increased 1.1% m/m to GEL 18.9bn in June 2017 according to the NBG (increased 1.6% m/m excluding exchange rate effect). GEL-denominated loans increased 3.4% m/m while foreign currency denominated loans increased 0.4% m/m (excluding exchange rate effect - increased 0.4% m/m). Larisation ratio for total loan portfolio stood at 41.01% in June 2017.

Non-banking deposits increased 2.8% m/m (increased 3.4% m/m excluding exchange rate effect) to GEL 16.8bn in June 2017. Larisation ratio for total deposits stood at 32.46% in June 2017. Average interest rate on GEL-denominated term deposits stood at 9.3% while average interest rate for foreign currency denominated term deposits was 3.7%. Out of foreign currency denominated deposits 84.1% were in US$ and 11.7% were in EUR.

 

Debt and Money Market

Eurobonds: during the week Georgia’s Sovereign Eurobond (GEORG 4/21) price was up 0.1% w/w to 111.9 (YTM 3.4%). BGEO Group JSC (BGEOLN 7/23) price was up 0.2% w/w to 102.4 (YTM 5.5%), Georgian Oil & Gas Corporation (GEOROG 4/21) price was up 0.2% w/w to 105.6 (YTM 5.1%), while Georgian Railway (GRAIL 7/22) price was unchanged at w/w to 109.9 (YTM 5.4%).

 

Equity Market

On Friday’s trading session, TBC Bank Group PLC (TBCG LN) shares closed at GBP 16.15, down by 0.7% w/w. During the week 164.2 thousand shares traded on the London Stock Exchange.

During the week 252.5 thousand of BGEO Group PLC (BGEO LN) shares traded, closing at GBP 34.40 (down by 0.8% w/w) on Friday’s trading session.

Georgia Healthcare Group PLC (GHG LN) shares were down 6.6% w/w closing at GBP 3.55 on Friday. During the week 42.7 thousand GHG shares changed hands on the LSE.

No trades were recorded on the Georgian Stock Exchange.

 

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