Eavex Ukraine Market Monitor: Feb 20
Equity
Ukrainian equities listed in Kyiv finished mixed last week as local news flow was dominated by a possible energy crisis in the country. A coal supply blockade from the Donbass by rogue nationalists has created risks for thermal power plants. CentrEnergo’s CEO Oleg Kozemko said that the company has already switched into a fuel saving mode at its Tripilska plant in Kyiv province. CentrEnergo’s (CEEN) stock edged down by 1.4% to UAH 11.10 per share. The railroad blockade could cause even broader negative impact for Ukraine’s economy if it leads to a breakup of production links with metallurgical plants located on the Donbass separatist-occupied territories. The government has not provided a persuasive answer on how the country can avoid potential blackouts. However, the situation looks like it may be a form of political extortion by right-wing populist parties. Meanwhile, Prime Minister Volodymir Groysman once again told the media that negotiations with the IMF are in the final stage regarding the disbursement of a USD 1.0bn loan installment in the coming weeks.
The UX index rose as high as 950 at mid-week before finishing at 920 points on Friday, a gain of 2.0% for the week. Motor Sich (MSICH) was the brightest spot among blue chips, advancing 4.6% to UAH 2150 after news that the company is close to receiving a large order from China. DonbasEnergo (DOEN) slumped 6.1% to UAH 12.85 due to the coal blockade problem.
London-listed Ferrexpo (FXPO) continue to impress, rising 4.5% to GBp 170 per share. In Warsaw trading, Kernel (KER) slipped 1.8% to PLN 77.50 as investors wait for news on how the company will spend its USD 500mn Eurobond proceeds. Crop grower Agroton (AGT) remained wildly volatile, falling 7.0% on profit-taking to close at PLN 6.65.
On the currency front, the NBU intervened to prevent the hryvnia from gaining too strongly against the dollar, keeping the rate above the 27 UAH/USD level. The hryvnia strengthened by 1.0% to 27.05 UAH/USD over the week.
POLITICS AND ECONOMICS
- G7 Calls for End to Donbass Coal Blockade by Rogue Nationalists
- Gov’t Ramps Up Nuclear Output Amid Coal Blockade
- UkrStat: Full-Year GDP Growth Was 2.2% in 2016
STOCKS IN THE NEWS
- Motor Sich Seeking Contract with Chinese-Russian Helicopter Venture
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