Kyiv-listed stocks retreated last week amid broad profit taking after the local benchmark index surged by 11% in a 4-session run earlier this month. We assume that a somewhat controversial report that Ukraine had the world’s best performing equity index in 2017 (+80% YoY) contributed to the selloff. Unfortunately, the low liquidity of the Ukrainian market makes it too soft to tolerate sharp movement in both directions. Some kind of this softness was seen last week when preceding week gains were almost diminished.
The UX index lost 5.7% over the week to close at 1427 points. Among negative news prompting traders to open short positions was information that the country’s Western backers, including the IMF, heavily criticized the draft bill on creating a formal anti-corruption court. The country’s inability to tackle the continuing high level corruption in most facets of business and society remains one of the reasons for slow economic growth.
UkrNafta (UNAF) took the biggest hit, tumbling 20% to UAH 121 per share. The company reported that its oil output fell 9.2% YoY to 1.38mn tonnes (10.0mn barrels) in full-year 2017. Although these results were more or less known in advance, the official release caused negative sentiments among retail investors. CentrEnergo (CEEN) and DonbasEnergo (DOEN) dropped by 3.1% and 5.4% respectively, with the former ending at UAH 14.44 per share.
Motor Sich (MSICH) showed notable resistance to the market correction, finishing essentially unchanged at UAH 4200 per share, while Raiffeisen Bank Aval (BAVL) lost 5.9% to 29.90 kopecks.
London-listed MHP (MHPC) expended its winning streak, adding 2.8% to another local maximum of USD 12.80. In Warsaw trading, Kernel (KER) edged up by 0.3% to PLN 49.20 despite a brief correction after the company unveiled disappointing sales volumes for the Oct-Dec 2017 quarter.
The hryvnia has still not found a new support level following the state budget’s telegraphing of a 10-15% devaluation in December; last week the currency lost another 1.0% to 28.80 UAH/USD. The National Bank admitted, without specifying a figure, that it was forced to sell hard currency to keep the interbank market balanced during the week.
POLITICS AND ECONOMICS
- New Donbass “Re-Integration” Bill Sidelines Minsk Accords
- IMF Unsatisfied with Ukraine’s Draft Bill on Anti-Corruption Court
- Ukraine’s FY17 Steel Output of 21mn Tonnes Ranks 12th Among Steel-Producing Countries
STOCKS IN THE NEWS
-Kernel Has Lower Sales Volume in Oct-Dec 2017. Stockpiles Increased
full report
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