OREANDA-NEWS  On 28 October was announced, that investors’ attention is focused on the crisis consequences rather than support provided by the governments. The markets again opened with decline, while the Asian markets demonstrated a significant drop. Loans provided by the IMF to Ukraine, Hungary and other countries provoke no agiotage among investors. CalPERS, one of the largest US retirement funds on Friday declared about necessity to close a number of its positions, which stimulated equities sales in the markets. The markets will not be supported either by the expected rate cut by the Fed at its meeting on Friday. Publication of report on sale of new houses in the USA as well as the scheduled for tomorrow publication of real estate prices index by S&P/Case Schillers are likely to reinforce the recession expectations in the largest economy of the world. Finally, publication of data on the US GDP deceleration in the third quarter jointly with earlier negative data from the UK are able to finally convince the investors that recession is already here.

The commodities markets demonstrate a bearish trend. The OPEC decision to reduce its oil production by 1.5 mn barrels a day starting from November produced no expected effect on prices decline in the sector. Meanwhile, the figures from emerging markets on basic materials consumption may turn out to be more significant. After collapse on Friday, today the Russian market will be closed. We must say that the IMF decision to issue a loan to Ukraine partly was motivated by strong dependency of the Ukrainian economy on another basic resource – metal. The sector company quotations demonstrated a remarkable drop on Friday meaning the growing mistrust of investors in Ukraine as one of the basic materials markets.

The IMF loan may be reduced due to inability of the Ukrainian government to reform the economy. The news that the IMF opened a USD 16.5 bn credit line for 2 years has no significant effect on the market. The loan issue is stipulated by a number of conditions related to reforms, including cutting the budgeted social expenditures, reducing  the balance of payment deficit  and more flexible currency exchange policy. The NBU official exchange rate has already reached UAH 5.22/USD , while the market one – exceeded UAH 6.00/USD , which, however, is connected with growing panic expectations and massive purchases of foreign currency. The NBU again is going to revise the exchange rate fluctuation corridor, but this decision is no longer a factor that forms the rate expectations. The regulator has failed to find an investor willing to buy Prominvestbank, and this week it will keep on searching for any. Besides, it is expected that tomorrow a decree will be approved that will raise the guaranteed deposit amount threefold to UAH 150 thousand. In Ukraine the situation with the banks is not too pessimistic – the NBU continued refinancing on Friday by allocating almost UAH 1 bn.