Locally-listed Ukrainian equities ended lower last week, ignoring a full-point reduction in the country’s benchmark interest rate. After the NBU cut its key refinancing rate from 14% to 13%, the market adjusted the yield on domestic (non-Eurobond) Treasury debt by 30 bps to 15.20% on the long end of the curve. The latest macroeconomic data was encouraging, with UkrStat reporting that retail sales rose by 3.1% YoY in 1Q17.
The UX index declined by 1.2% to 1026 points. UkrNafta (UNAF) was once again the worst-performing blue chip, slumping 7.8% to close at UAH 103 per share amid rumors that the company is considering an asset sale in order to pay off part of its UAH 13.2bn production tax debt. Additional disappointing news for UkrNafta was that its oil extraction fell 3.6% YoY to 359,300 tonnes (2.6mn barrels) in 1Q17. In other UX index components, Motor Sich (MSICH) slipped 0.5% to UAH 2187, and CentrEnergo (CEEN) edged down by a moderate 0.8% to UAH 10.65 despite negative news that the company has suspended electricity generation at two of its three power plants as a result of a shortage of anthracite coal.
In London, Ferrexpo (FXPO) continued to give back part of its long run of gains amid declining iron ore prices. The stock moved down by 5.5% to GBp 146 per share. Low-liquidity issue MHP (MHPC) climbed 1.5% to USD 10.20 after the company published its first-quarter operational report with no negative surprises. Warsaw-listed Agroton (AGT) added 1.2%, closing just below PLN 7.00 line, while Kernel (KER) edged down by 2.1% to PLN 67.30, with its correction now standing at 15% from the stock’s multiyear maximum of PLN 80.00 per share seen in February.
The hryvnia gained 0.4% against the dollar to close at 26.72 UAH/USD. We assume that the interbank currency market is experiencing strong supply of foreign currency from large agro producers in need of hryvnia cash at the height of the spring planting campaign.
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