The FINANCIAL — Economy
International arrivals up 10.6% y/y in 7M16
Total international arrivals to Georgia increased 3.5% y/y to 0.74mn persons in July 2016, while tourist arrivals (visitors staying more than 24 hours) were up 15.8% y/y to 0.4mn persons (51% of total), according to the Ministry of Internal Affairs. Slower growth in total visitor number in July was attributed to interruptions on border check-point with Russia due to weather conditions. In July 2016, top 6 countries by arrivals were Azerbaijan (+4.4%), Armenia (-7.4%), Turkey (-7.9%), Russia (-2.7%), Iran (+575.3%) and Ukraine (+18.4%) and accounted for 86.1% of total arrivals; Visitors from EU were up 4.0% y/y and number of arrivals from other countries posted spectacular growth at 48.9% y/y in July. In 7M16, total international visitors to Georgia increased 10.6% y/y to 3.4mn persons, out of which tourist arrivals were up 17.5% y/y to 1.4mn persons.
Inflation rate at 1.5% y/y and 0.2% m/m in July 2016
Annual CPI inflation rate increased slightly to 1.5% in July 2016 from 1.1% in previous month, according to GeoStat. Core inflation was also up to 3.1% in July 2016 from 2.9% in June. Overall price changes were driven by price increases in alcoholic beverages and tobacco (+13.1% y/y, +0.80ppts), housing, water, electricity and gas (+6.1% y/y, +0.51ppts), and health (+4.1% y/y, +0.40ppts) categories. Meanwhile, prices in transport category decreased (-8.6% y/y, -1.04ppts), as prices were down for purchase of vehicles.
On a monthly basis, prices were up 0.2% in July 2016 following 4 consecutive monthly deflations. Price decreases in food and non-alcoholic beverages (-0.4% m/m, -0.11ppts) and price increase in transport (+1.3% m/m, +0.16ppts) categories were the major drivers of the monthly inflation dynamics.
Tax revenues up 8.4% y/y in 7M16
Consolidated budget tax revenues were up 5.5% y/y to GEL 803mn in July 2016. In 7M16, consolidated budget tax revenues stood at GEL 4.96bn, up 8.4% y/y and accounted for 57.1% of annual 2016 plan, which compares well with the actual 2015 data.
International reserves up 16.7% y/y in July 2016
Gross international reserves increased 16.7% y/y (+US$ 409mn) to US$ 2.86bn as of end-July 2016, according to NBG. Reserves were flat m/m. Increase in reserves was attributed to operations with commercial banks.
Bank of Georgia signs GEL 60mn 5-year loan agreement with BSTDB
The Bank of Georgia and Black Sea Trade and Development Bank (BSTDB) have signed a GEL 60mn loan agreement, with a 5-year maturity. This long-term local currency loan facility will be used to finance investments and the working capital needs of local businesses in rural and urban areas of Georgia. BSTDB obtained the local currency funds through a private placement of GEL-denominated bonds arranged by Galt & Taggart, in line with BSTDB’s strategy for development of the local capital market and support of the country’s economy.
Fixed income
Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.8% yield, trading at 100.9 (+0.3% w/w). GOGC Eurobonds (GEOROG) were trading at 104.3 (+0.18% w/w), yielding 5.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.5 (-0.2% w/w), yielding 5.5%. Georgian Sovereign Eurobonds (GEORG) closed at 111.3 (+0.1% w/w) at 4.2% yield to maturity. Georgia Eurobonds, YTM (%)
Equities
BGEO Group (BGEO LN) shares closed at GBP 29.15/share (+6.74% w/w and +20.16% m/m). More than 213k shares traded in the range of GBP 26.06 – 29.15/share. Average daily traded volume was 51k in the last 4 weeks, less than in the previous month. FTSE 250 Index, of which BGEO is a constituent, gained 1.06% w/w and gained 8.37% m/m, respectively. The volume of BGEO shares traded was at 0.54% of its capitalization.
TBC Bank (TBCB LI) closed the week at US$ 13.00 (-1.52% w/w and +1.96% m/m). More than 3k GDRs changed hands in the range of US$ 13.00 – 13.20/GDR. Average daily traded volume was 20k in the last 4 weeks, less than in the previous month.
Georgia Healthcare Group (GHG LN) shares closed at GBP 3.00/share (-1.96% w/w and unchanged m/m). More than 71k shares were traded in the range of GBP 2.95 – 3.10/share. Average daily traded volume was 24k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization.
On the Georgian stock exchange: No shares were traded on the Georgian Stock Exchange. As a result, the G&T Index remained at 842.35 (unchanged w/w). BGEO Group PLC (BGEO LN)
Money Market
Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 600mn (US$ 255.6mn).
Ministry of Finance Treasury Notes: 2-year GEL 30.0mn (US$ 12.8mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on August 3, 2016. The weighted average yield was fixed at 7.208%. The nearest treasury securities auction is scheduled for August 10, 2016, where GEL 45mn nominal value 1-year T-Notes will be sold.
