Kyiv-listed equities finished generally higher last week, spurred by a traditional holiday season rally rather than any fresh fundamental drivers. Although Ukraine’s economic outlook has brightened somewhat with an expectation of 3% GDP growth in 2018, such growth would still be too slow for a country where the average salary is below USD 300 per month. The next year will likely be a transition into election season for President Poroshenko, reducing the chances that serious reforms will be implemented. This assumption has a confirmation in the most recent statement by the IMF, which does not plan to send its monitoring mission to Kyiv for the fourth review of the USD 17.5bn support program, as Ukraine has not complied with the program requirements.
The UX index finally broke out of its two-month trading range, climbing above the 1,285 point resistance level. The gauge rose 1.6% over the week to close at 1,298 points. Electricity producer CentrEnergo (CEEN) added the most points to the index, advancing by 4.8% to UAH 12.00 per share. Raiffeisen Bank Aval (BAVL) also outperformed the broad market, gaining 2.2% to 29.00 kopecks. Meanwhile, UkrNafta (UNAF) remained isolated from any growth impulses, slipping back by 2.0% to UAH 139.
In London trading, Ferrexpo (FXPO) rebounded by almost 5% to GBp 267 while MHP (MHPC) inched down 0.4% to USD 11.40 per share.
On the Warsaw Stock Exchange, top liquid name Kernel (KER) saw renewed selling pressure, with the stock dropping by 4.1% back to PLN 48.50 without a visible reason.
The hryvnia was hit hard by the government’s official budgetary forecast of an average exchange rate of 29.30 UAH/USD for 2018, which we assume triggered immediate demand for hard currencies from households; the hryvnia fell by 2.0% against the dollar to 27.65 UAH/USD. In response, the National Bank raised its key policy rate from 13.5% to 14.5%, aiming to improve the hryvnia’s attractiveness.
POLITICS AND ECONOMICS
- US, Britain Condemn Violence at Saakashvili-Led Protest
- 2018 Budget Forecasts 9% Hryvnia Deval to 30 UAH/USD
- Ukraine Headline Inflation Slows Further to 13.6% in November
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