Equity
Ukrainian Kyiv-listed equities saw subdued activity last week, pausing from an impressive rally that started immediately after the New Year. Most macroeconomic statistics released over the week were positive, including data showing a firm rise in industrial production in December. On the other hand, the attraction of foreign investment, which are badly needed to spur growth, has not improved much. Costs for Ukrainian business to get financing on international markets remains very high due to the overall risk perception of the country. The debut placement of 5-year Eurobonds by Warsaw-listed agro giant Kernel with coupon rate of 8.75% confirmed our concerns regarding high borrowing rates. Nevertheless, the widespread attention to Kernel’s bond placement from global portfolio investors is an encouraging indication that Ukraine is becoming more interesting for foreign capital with the military situation in the Donbass occupied territories having been more or less frozen for the last 16 months.
The UX index inched down 0.4% to end at 860 points. In the most liquid index components, CentrEnergo (CEEN) contracted by 0.3% to UAH 11.20 and UkrNafta (UNAF) retreated 2.3% to close at UAH 112 per share.
London-listed Ferrexpo (FXPO) advanced by 10% to GBp 143, putting the stock near its 3-year high. In Warsaw trading, Kernel (KER) surged 8.8% to PLN 80.00 as the company’s announced expansion strategy using its new borrowing proceeds should lead to higher earnings. Lugansk-based crop grower Agroton (AGT) continued to build on its impressive recovery story, adding 2.7% to PLN 6.40 per share and building a foundation for its next possible jump in case the company can impress with its 2H16 profits.
POLITICS AND ECONOMICS
- Kremlin Plays Up Trump-Putin Talks: “Ukraine Crisis” Discussed
- Industrial Output Posts 2.4% Rebound in FY16 after 13% Drop in 2015
STOCKS IN THE NEWS
- Kernel Debuts With USD 500mn 5-Year Bonds at 8.75%
- MHP’s FY16 Sales Volume Up 7% YoY to 575,000 T; 4Q Volume Down 14% QoQ
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