From the Opalesque team: Bank of Georgia (BGEO LI) and its subsidiary Galt & Taggart Securities provided their clients and investors with the most up-to-date and unbiased version of news available on the conflict in Southern Ossetia in an email yesterday.
Events of 18-21 August:
- In a telephone conversation with French President Nicolas Sarkozy, Russian President Medvedev promised that all but a 500-men contingent of Russian peacekeepers would leave Georgian soil by Friday August 22.
- Over the weekend Russian soldiers attacked the civilian port of Poti, sinking Coast Guard ships and taking 20 police man assigned to guard the port hostage. The civilian owners of the port have announced plans to sue the Russian government for the attack.
- US lawmakers are scheduled to vote on a US$ 1bn (roughly 8% of Georgia’s GDP) infrastructure aid package for Georgia.
- International aid organizations like Human Rights Watch and an official report by a Russian investigative committee in South Ossetia put the number of South Ossetians killed in the conflict at 133 people, undermining Moscow’s original claims of Georgian genocide in the first days of the conflict and countering South Ossetian rebel claims that over 2,000 civilians had been killed.
- Human Rights Watch has also alleged that Russian used cluster bombs aimed at civilian areas in its attacks on the city of Ruisi and Gori.
- The UN’s High Court is scheduled to hear a Georgian complaint against Russia for human rights violations on September 8-10.
- The UN’s humanitarian mission is calling on the Russian forces to open humanitarian corridors into the territories they control as currently they are having trouble getting supplies the victims of the conflict.
- The OSCE has announced that it will send in 100 unarmed observers to the borders of the Georgian conflict zone to ensure that the cease-fire is up kept.
- G7 Finance Ministers pledged to be actively involved in supporting Georgia’s economy to help it recover from the Russian invasion.
- The Bank saw withdrawals of GEL 165mn (roughly 10% of deposits), during the conflict, but since the end of hostilities the situation has stabilized.
- Bank of Georgia is currently assessing the impact that this conflict has had on asset quality. The bank has no assets in South Ossetia and only about US$ 2mn of exposure in the town of Gori. However, impact of recent events on corporate clients is likely to be more significant. According to various estimates the damage to the country’s civilian infrastructure was about US$ 1bn, or 8% of Georgia’s projected 2008 GDP.
- The Bank is working actively with international organizations like the IFC and EBRD to help rebuild infrastructure in Western Georgia and help the victims of the conflict.
As the situation has calmed and market participants are waiting for additional news and updates, volumes have been substantially lighter this week, trading just US$ 1mn in the first 3 sessions. This compares to nearly US$ 50mn in the same period last week. The price has stayed up at US$ 13 through Thursday morning.
Why you should buy BGEO LI now:
At US$ 13.0 the stock continues to represent an excellent risk/reward metric, because of the clear floor established in the 12s, a stock price of just over 5x earnings, and a P/B of 0.8. In the very near term we expect the price to rebound to at least book value. The hostilities did not have a major effect on BoG business.
Bank of Georgia Group Humanitarian Effort:
Galt & Taggart Securities announced that its parent company Bank of Georgia (BGEO LI) has established a fund to support the victims of the conflict in South Ossetia and has made an initial contribution of GEL 1 million. The use of funds will be supervised by a special monitoring group established by Bank of Georgia, which will work in close collaboration with the Ministry of Labor, Health and Social Affairs of Georgia and Mayor's Office of Tbilisi which are coordinating the humanitarian assistance for the victims of South Ossetia conflict. All contributions to the Fund will be highly appreciated.
We encourage everyone who is interested to take part. We thank you in advance for your support. For more details please contact: Macca Ekizashvili, Head of Investor Relations, Bank of Georgia, +995 32 444 256, ir@bog.ge.
Galt & Taggart Securities’ corporate website: Source
George Friedman: Russians proved they can execute competent military operation and that the U.S. cannot intervene
From strat......................
Source:
http://www.opalesque.com/AMB2008/46472Russia_Georgia_Special_Bank_of.html
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