Page 31 - bne IntelliNews Georgia country report November 2017

to the development of capital markets in Georgia. By and large, Georgians do not yet have the culture to invest in stocks, preferring instead material investments like real estate or large consumer goods. The Georgian middle class, while growing, does not have the sufficient investment capital yet to become a sizeable financier of the private sector.
Furthermore, the Georgian currency has had a chequered performance since 2014. Between 2014 and 2015, it depreciated by 40% against the dollar. Although it has somewhat recovered since, more recent but short-lived waves of depreciation have continued to concern investors.
As a result, GSE does not yet offer sufficient financing potential to incentivise large Georgian corporations, such as TBC Bank or Bank of Georgia, to issue equity on it; the two lenders have chosen to go public in London instead.
At the same time, Georgia has become an attractive investor destination. Thanks to sustained growth rates of some 3% per year in 2015-2016 (which are expected to increase to more than 5% in 2018), investor-friendly policies, numerous free trade agreements, and close relations with the EU, but also with Iran, Turkey and Central Asian countries, Georgia is on a growth wave that could very well be reflected in its capital market soon.
One recent development that could speed up the process is, according to Paresishvili, the fact that the GSE and the Central Securities Depository are working on a major upgrade of the trading platform, with the help of the central bank. "Once the upgrade is complete, it will provide much better access to non-resident investors to the local market. The upgrade will result in GSE using a state-of-the-art platform that will allow investors not only to trade stock, but also to lend, borrow and do all the operations that can be performed on developed stock exchanges ," he explains.
As for the EBRD, Paresishvili hopes that the bank will continue to support the development of Georgia's capital market by moving into buying corporate bonds directly and thus acting like an anchor investor for the local market. "We have seen more issuances of local corporate bonds recently. In 2016, they represented 40% of the securities traded on GSE," he says.
Georgian Stock Exchange GSE recorded a turnover value of GEL163,509.48 as of July 2017, a whooping increase from GEL38,932.77 a year ago. The highest turnover value of GEL4,163,201.12 was seen in May.
31 GEORGIA Country Report November 2017 www.intellinews.com