Ukraine’s post election market rally short-lived

Ukraine’s equity market has returned to its original sluggish state after a brief rebound on the news of election results last month.

Sberbank CIB says in a research note the local market retraced its gains last week from the previous one, with the UX Index closing 3.0% lower (down 44% year to date).

The note says “investors turned largely to spectators” last week, as the country’s Central Election Commission stalled its announcement of the verdicts on the party list and the single mandate constituency vote counting results.

The main problem causing nervousness is the timing and extent of the expected devaluation of the local currency, the hryvnia.

The National Bank has not provided much help to change this trend. As gross international reserves slid by $2.4bn month on month in October to $26.8bn, the hryvnia has remained virtually flat.

In the coming weeks, Sberbank expects trading to remain flat as pressure from the weakening currency continues to build up.

However, some “marginal positive sentiment” can be expected from the official parliamentary election results, which should be published by the end of this week.

Sentiment may increase in particular towards foreign-listed stocks, Sberbank says.

Support levels could be re-established for names like Kernel Holding and MHP, provided the interim financial results scheduled for this week do not disappoint.

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