Ukraine’s local stock market took a pause from its gains after reaching a 3-year high on the back of strong early autumn buying. Traders once again see risks in hryvnia instability amid a high chance that Kyiv’s cooperation with the IMF will be interrupted by the political decision to freeze energy tariff growth. After five weeks of volatility, the hryvnia has stabilized for now near 26.50 UAH/USD, with knowledge that the National Bank (NBU) has USD 18.6bn in foreign currency reserves helping to deter speculation.
The UX index ended flat for the week at 1218 points ahead of the 3-day weekend to mark the new Defenders’ Day holiday on Oct 14. The biggest surprise among the five blue chips was in DonbasEnergo (DOEN). The low liquidity stock jumped 14.4% to UAH 17.35 after the State Property Fund announced that it intends to hold an auction in December to sell the government’s 25% blocking stake. We suppose that the IMF has been pushing Kyiv to get rid of its blocking stakes in energy companies, as these holdings serve no real purpose for the state and can be an easy source of privatization revenue. CentrEnergo (CEEN) finished the week unchanged at UAH 10.90 despite hitting an intraday high of UAH 11.50 on Oct 11 after the government (which owns 78%) changed its mind about trying to de-list the company’s stock. In second tier stocks, railcar producer Krukiv Wagon (KVBZ) edged up 1% to UAH 9 on the nose.
In London trading, Ferrexpo (FXPO) slid 2.7% to GBp 289 on the back of a retreat in the global iron ore benchmark price to USD 58 per tonne. Meanwhile, poultry giant MHP (MHPC) was unchanged slightly above the USD 11 level. On the Warsaw Stock Exchange, the most liquid Ukrainian issue, Kernel (KER), slumped 6.7% in an extension of its grim losing streak to end at PLN 48.00. We see no obvious justification for the drop other than speculation that the company’s full-year 2017 financials (due for release on Oct 23) will be less rosy than expected. Meanwhile, Astarta (AST) and Agroton (AGT) advanced by 3.4% and 16% respectively, with the latter finishing at PLN 4.47 per share.
POLITICS AND ECONOMICS
- Streets in Central Kyiv Shut Down Ahead of Tuesday Demonstrations
- Ukraine Headline Inflation Edges Up to 16.4% in September
STOCKS IN THE NEWS
- Gov’t Backs Down on CentrEnergo De-Listing Threat
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