Kyiv-listed stocks suffered notable losses over the first two weeks of August, as tensions between Ukraine and Russia have been on the rise amid increased fighting in the Donbass conflict zone. In a related serious development, Russian President Putin last week accused the Ukrainian government of planning terrorist attacks in the Russian-controlled province of Crimea. President Poroshenko dismissed the allegations, calling them a possible pretext for new military threats against Ukraine. Putin’s allegations have been neither proven nor disproven, but European and US diplomats have expressed skepticism over the Russian claims. Both countries stepped up security on the de facto border between Crimea and mainland Ukraine. Investors expressed their worries with a selloff across most of blue chips. CentrEnergo (CEEN) was the only exception, gaining 2.0% since the start of the month to close at UAH 7.94 per share, while the UX index dropped 3.8% to 693 points. Raiffeisen Bank Aval (BAVL) slid 7.1% back to the 10-kopeck level after its gain of 16% in July. Motor Sich (MSICH) fell back below the UAH 2000 per share water-mark, losing 5.6% over the last two weeks to UAH 1882. In London trading, Ferrexpo (FXPO) rocketed up by 43% to near GBp 77, its best level in more than a year, after the company reported its interim financial results on Aug 3. We assume investors cheered the company’s ability to reduce its debt-to-EBITDA ratio from 2.8x at the start of the year to 2.5x in 1H16. Poultry giant MHP (MHPC) has advanced by 6.5% to USD 9.80 so far in August. In contrast, Warsaw-listed Ukrainian stocks have been on the downswing, with Kernel (KER) and Astarta (AST) declining by 4.0% and 0.8% respectively in August, with the former currently at PLN 59.50 per share. The hryvnia weakened against the dollar on the interbank market amid the renewed Russia tensions, despite the country’s foreign currency reserves having increased in July. The currency slipped 1.2% over the last two weeks to 25.07 UAH/USD. Meanwhile, the NBU reported that the reserves edged up by 0.7% MoM to USD 14.1bn.
POLITICS AND ECONOMICS
- West Calls for Calm After Putin Accuses Kyiv of “Terrorism” in Crimea
- Consumer Prices Inched Down 0.1% MoM in July
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