Equity
Kyiv-listed stocks were hit hard last week as aggressive short players outweighed buyers ahead of the expiration of the UX index future contacts, an event which occurs every 3 months. Trading volatility on the Ukrainian Exchange traditionally rises a day or two before the futures expire. The December contract expired on Thursday (Dec 15) at 760 points. Meanwhile, the March contract on the UX index continues to trade above the 800 point level. Among main economic headlines over the week, the National Energy Regulatory Commission (NERC) announced its intention to lower electricity tariffs for industrial use by 10% to UAH 1.34/kWh (5.1 cents) starting on Jan 1. Although the news looks encouraging for the industrial sector, we remain skeptical that the government will find enough cost saving measures in the energy system to avoid being forced by the IMF to roll back the tariff decrease.
The UX index tumbled 3.9% to 762 points due mostly to speculative rather fundamental reasons, although concerns about the possible nationalization of PrivatBank provided some general negative sentiment. UkrNafta (UNAF) was the worst-performing index component, sliding 5.3% to close at UAH 102 per share. DonbasEnergo (DOEN) slipped below UAH 10 line, falling 4.5% to UAH 9.85. The stock did not react to unconfirmed information that the company has received permission from Kyiv to directly purchase coal from mines located on the Donbass separatist-occupied territories.
London-listed Ferrexpo (FXPO) paused from its recent sharp appreciation, declining by 4.0% to GBp 139. MHP (MHPC) continued to suffer from a food-safety-related suspension of Ukrainian poultry exports to the European Union, slipping 2.3% to close at USD 8.75, which is a 6-month minimum for the issue. In Warsaw trading, Lugansk-based Agroton (AGT) extended its rally, advancing 5.9% to PLN 4.29, while top liquid name Kernel (KER) was unchanged at PLN 65.50.
The hryvnia followed the global trend of currencies devaluing against the dollar after the Federal Reserve raised its key interest rate. The hryvnia declined on the interbank market by 1.2% to end at 26.30 UAH/USD.
POLITICS AND ECONOMICS
- Savchenko Stuns Establishment with Unauthorized DNR/LNR Meeting
- Cabinet Announces Nationalization of Ukraine’s Largest Bank
- Ukraine Extends FX Capital Controls to Limit Speculation
- Gov’t Reports Expectation-Beating Harvest Total of 64mn T for FY16
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