Monday, July 11th, 2011: the Ukrainian equity market indices fell significantly: the UX index slid 1.57% closing at 2303 points, PFTS index lost 1.64% falling to 896.01 points. The shares of Zakhidenergo [ZAEN -3.01%] and banks [BAVL -3.01%; USCB -2.93%] were the loss leaders on the market. Achevsk metallurgical plant [ALMK +2.11%] was the sole gainer.
The world’s major stock markets continued to fall in response to the growing worries on expanding European debt crisis in Italy and Spain and disappointing US job market data released earlier.
Traders’ perspective: The external background influencing the dynamics of the Ukrainian stock market remains negative. We expect a further decrease on the broad equity market today. ALMK stocks grew against the market on groundless rumors on probable acquisition by Metinvest. Although the stock has strong fundamentals, we believe it will move similarly to overall market dynamics in the nearest future as the market remains weak.
Ukraine’s parliament bans consumer loans in foreign currency.
Verkhovna Rada adopted a law which calls for a ban on the provision of consumer loans denominated in foreign currency.
NRG’s outlook: Loans extended in foreign currency to finance consumption could turn out disruptive to the banking sector, the local currency and the overall economy, as was shown during the crisis of 2008-2009. Therefore, we view such move by Ukraine’s parliament as beneficial to the country’s banking system, and we believe such regulations will foster greater stability in the sector. In our view such a ban is also aimed at limiting the financing of imports which have so far considerably outpaced exports, resulting in a current account deficit of 3.8% of GDP (as of May 2011 based on the last twelve months) which could potentially add pressure on the local currency.
