Stock Exchange Development to Heat Up in 2020
Stock exchange development will accelerate in Georgia in 2020-2021, according to TBC Bank Deputy Director General Giorgi Tkhelidze on the TV program Business Partner. Bonds issued by companies are very expensive for small investors. Bond-issuing companies will place shares on theGeorgian Stock Exchange, Tkhelidze explained.
“Confidence should be higher when buying shares. Therefore, we believe that companies that take active efforts when issuing bonds, or have already issued bonds, and are the strongest candidates to place shares on the stock exchange, because for the placement of bonds and shares that do not differ much from each other.
I mean, preparation for issuance, corporate management, financial accountability. Therefore, I believe these companies will be pioneers in the development of the stock exchange. At this early stage the process is protracted, however, there are several factors that will essentially boost the stock exchange in 2020-2021”, Tkhelidze said.
Meri Chachanidze, managing director of the TBC Capital brokerage company, noted that the Pension Fund is also a pro-growth factor, because the agency plans to start making investments on the stock exchange in 2020.
“There are a number of companies that are ready to enter the stock exchange. Investor confidence is of crucial importance, on the one hand, and Georgians’ confidence in companies is also very important when buying their shares. The Pension Fund is one of the decisive factors. Its investment board has already been staffed, and we expect them to launch active investing in 2020, in both securities and shares. It is very important that they make investments only on the stock exchange. Therefore, it is essential to deliver information to all Georgia-based corporations to get ready for this process”, Chachanidze said.
The market for Georgian corporate bonds grew by 20% in the second quarter year on year and made up about 12 billion GEL, she noted.
We know that the Georgian bonds market used to grow by 23% on average before 2018, and the market hit 10 billion GEL in 2018. Much higher growth was recorded in the first half of 2019, because this 10 billion GEL grew by 11% to 11 billion GEL.
Higher growth was recorded in the second quarter. A high pace of growth on the bond market will be maintained, because companies try to diversify their financial resources, Chachanidze said.
“In the second quarter, TBC Bank placed two flows of Eurobonds, and the 11% upturn in the first quarter was replaced by 20% growth in the second quarter. The consolidated value of the bonds market made up 12 billion GEL. These figures mean that companies that try to diversify their finances and attract resources from the capital market, too, besides loans from financial institutions”, Meri Chachanidze said.
The ratio of private bonds grows considerably as a part of the total volume of bonds, and this growth represented 50% of the domestic market, compared to the previous year. Various factors will further accelerate the growth, she noted.
“The ratio of private bonds is growing. Domestic corporate bonds have grown by 50% year on year. We have a high rate of growth, and we expect this pace to heat up further, because the companies, which have issued bonds, are able to issue new bonds by the time they buy off the initial bonds; that is, they are able to carry out re-issuance. The more companies grow and improve their management structure, the weaker the barriers will be.
Based on all these factors, I believe the number of companies ready for issuing securities that are interesting for investors will increase”, Chachanidze said.