UFC Capital Published Ukrainian Market Daily Expectations (October 22)
OREANDA-NEWS On 23 October was announced, that UFC Capital published Ukrainian market daily expectations. The US dollar again becomes the investments protection tool. Oil prices drop despite statements made by OPEC as well as the US dollar strengthening to the record-breaking level since late 2006, caused by expectations that the ECB will cut rates, will unlikely add optimism to the stock markets. The Asian markets opened with significant decline. The Russian market again feels the pressure of the weak demand for oil amid expectations of the global recession. Besides, the yesterday’s speech made by the Bank of England chair about possible start of the country’s economy setback may have a negative impact on the European markets.
Interest in the fixed-income market may become stronger. For the fourth day in a row the US treasuries demonstrate growth in prices. It should be said that amid stronger dollar these securities become an efficient tool for investors' interest protection. Meanwhile, the shift in the interest in emerging markets bonds is multi-oriented. While the news from Argentina about need in the large-scale aid to the retirement funds is significantly increasing the default possibility, the decline of Ukrainian Eurobonds is apparently coming to its end. The Russian Eurobonds also started their upwards movement.
The expected hryvna devaluation may lower the interest of investors in the Ukrainian shares. After Fitch downgraded the ratings of Ukraine, the NBU sent a letter to this agency expressing its disagreement with this move. As a result, the bonds have discontinued their decline, but the assets denominated in hryvna, in particular Ukrainian equities, are demonstrating the extremely weak growth, including because of the hryvna devaluation expectations. So, the NBU official exchange rate today has exceeded UAH 5.00/USD and the currency regulator leads it to the rate of UAH 5.1/USD , at which it sells the foreign currency from its reserves. The Ukrainian President in his speech informed that the NBU’s gold and currency reserves shrank by USD 2.9 bn to USD 34.6 bn for October 1-20. Proceeding from the limitations imposed by the NBU on the official rate deviation from the market one, the dollar may be traded at the level of UAH 5.3-5.4 in the nearest future.
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