The PFTS Index shed another 1.6% on Wednesday, though relatively low trading volumes meant the drop was mainly technical. Expectations of solid 1H08 financial results from the most liquid domestic companies and potentially improved macroeconomic data from the State Statistics Committee could help the Index recover temporarily and distance itself from developed countries’ depreciating stock exchanges. Any potential stabilization will likely be short-lived, and a bearish mood should dominate the market until at least the fall.
Yesterday’s trading session was marked by a general stabilization among actively traded stocks, the one exception being Enakievo Steel (+2.2%), which saw solid appreciation. Other names in the basket hovered around zero: Azovstal (-0.2%), Alchevsk Steel (-0.01%) and Centrenergo (+0.2%).
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02.07.2008
Yesterday, the PFTS Index recorded its third worst trading day in the last 18 months, dropping 4.6%. The large decline was mainly caused by the continued appreciation of oil prices and speculation about higher natural gas prices for Ukraine from 2009. Fortunately, favorable US manufacturing data and macroeconomic statistics from the State Statistics Committee of Ukraine to be published this week will likely reverse the decline temporarily as natural gas speculations will be overshadowed by real, strong fundamentals.
The stocks that have frequently been hit the hardest during the latest market correction once again showed the largest declines. Bank Aval (-9.9%), Ukrsotsbank (-6.1%) and the rest of the banking sector were hit the hardest regardless of expected strong 1H08 financials. Yet again, Motor Sich (-6.4%) beat the engineering sector sell-off for liquidity reasons, while UkrAVTO (-10.2%) and Kryukiv Railcar Plant (-17.2%) dropped significant values despite increased production levels and revenue growth, especially Kryukiv. In the electricity sector, a lack of industry reforms caused Centrenergo (-13.7%) and Zakhidenergo (-5.9%) to decline. Finally, the standard steel sector names, Enakievo Steel (-6.1%) and Alchevsk Steel (-7.2%), joined the market, depreciating significantly.
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01.07.2008
As the first half of 2008 came to a close last week, the PFTS Index lost 2% to reach its lowest point in 2008, a level not seen since mid-April 2007. High oil and gas prices, continued US stagnation fears and political instability in Ukraine are fueling the domestic pessimism, and a second half market rebound is doubtful. Negative expectations are still lingering, and we expect the market to continue its decline at least until the end of summer.
The stocks that have frequently been hit by the lasting correction were hit once again on Friday Enakievo Steel (-1.2%), Centrenergo (-1.2%), Ukrnafta (-2.1%), Motor Sich (-1.2%), Alchevsk steel (-2%) and Azovstal (-1.3%) led the decline by virtue of their liquidity.
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27.06.2008
Trading levels improved on Thursday but sellers still dominated the market, and the PFTS Index (-0.3%) came to a rest not far from this year’s lowest level.
Bank Aval (+0.2%) topped the list of most traded stocks as the market expects good financial results for Ukraine’s leading banks in 1H08. Motor Sich (-2.4%) continued to depreciate, possibly on a big sell order as there are no fundamentals precipitating the stock’s decline. Enakievo Steel (-1.8%), Alchevsk Steel (-0.9%) and Centrenergo (-0.4%) declined for the same reason. With the situation on international markets still difficult, we do not expect any improvement in market performance this week.
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26.06.2008
Owing to a growing number of “ratings oriented” deals closer to the end of the month, trading volumes were relatively high, while core activity remained low, keeping the PFTS Index virtually unchanged (-0.16%).
The engineering sector was popular with investors mainly because it offered a good opportunity to sell on increased market liquidity. Stakhaniv Railcar Plant
(-13.6%) was actively withdrawn from portfolios in advance of the company’s upcoming additional share issue. UkrAVTO (-1.1%) depreciated as the WTO effect continues to be priced in by the market. Centrenergo (-1%) signalled the continued sell-off in the electricity sector, and the steel sector showed the first signs of stabilizing as Avdiyivsky Coke (+0.1%) and Enakievo Steel (+0.3%) grew marginally. The banking sector’s most liquid names strengthened: Ukrsotsbank (+0.4%) and Bank Aval (+1.2%). We expect the market to remain stable for the remainder of the week.
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25.06.2008
Monday’s PFTS Index growth was eliminated yesterday as expectations that the American Fed will increase interest rates triggered more selling activity on the market. Domestic news, including another failed attempt at Ukrnafta’s (-3.5%) AGM, added a shot of pessimism to the local cocktail. The resulting volatility continued to hit the most liquid stocks.
The heaviest trading activity remained in the steel sector Avdiyivsky Coke
(-2.7%), Enakievo Steel (-2.9%) and Alchevsk Steel (-4%). Engineering stocks, including Mariupol Heavy Machinery Plant (-6%) and Motor Sich (-3.7%), were also popular among traders. Centrenergo (-2.7%), Zakhidenergo (-3.5%), Donbasenergo (-5.8%) and other GenCos started trading actively on the falling market, signaling that they are overvalued.
After a few days of positive activity, the market is heading back into its correction as it waits for positive domestic news that would set it apart from other stagnating stock exchanges.
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24.06.2008
Subdued activity by international players yesterday allowed local brokers to support the market and push the PFTS Index up by 1.3% to join European markets on the positive side.
Expectations that high steel prices will continue rising supported the growth of metallurgical stocks, including Azovstal (+2.3%) and Enakievo Steel (+3.8%). Engineering stocks also advanced as machine building remains the fastest growing sector of the Ukrainian economy. Motor Sich (+2.6%) and UkrAVTO (+1.3%) were the sector’s most popular names yesterday. Stakhaniv Railcar Plant (-6.5%) continued to shed its value in large blocs as few companies can afford to withdraw liquidity to participate in the plant’s upcoming additional share issue. Finally, banks started to advance on the back of more active fundraising on international markets, with Bank Aval (+2.7%) and Ukrsotsbank (+3.3%) leading the trend.
However, the market stabilization promises to be short-lived and last week’s correction is expected to continue as soon as big sell orders from international funds reappear.
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23.06.2008
On Friday the PFTS Index parted ways with global stock exchanges and advanced solidly (+1.3%) after overshooting its correction on Thursday. However, the positive showing is not expected to last long, as fears of a US recession, prolonged credit crunch and higher oil prices are still dominating markets worldwide. Emerging market economies are mainly concerned with the magnitude of the spill-over effect from the continued global uncertainty. The effect on emerging markets will be delayed, and as a result, investors have not been inspired by Ukrainian companies’ 1Q08 operating results, especially as expectations for the economy and the political situation in Ukraine are not improving.
Friday’s rebound was led by the same names that had powered the correction earlier last week Enakievo Steel (+1.4%), Motor Sich (+0.6%), UkrAVTO (+1.8%) and Alchevsk Steel (+0.9%). Newcomers to the list of actively traded stocks included Avdiyivsky Coke (-1%) and Ukrtelecom (+1.1%).
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20.06.2008
On Thursday, the PFTS Index continued its decline (-2.8%), returning to levels seen back in March 2007. The Index is expected to drop further still, and the recent selling activity shows that it could soon reach February 2007 lows as there are few factors capable of reversing the domestic market’s fortunes and supporting Index growth in the next two months. A potential reformation of the ruling parliamentary coalition, possible new pre-term elections and the UEFA inspection of Ukraine’s EURO-2012 preparations will prove to be influential market benchmarks this summer.
Late August could see a rebound when Ukrainian corporations begin reporting 1H08 financial and production results.
In the meantime, the large-scale sell-off on the PFTS continued, and the most liquid stocks remained under heavy pressure. Investors actively sold Ukrnafta
(-3.8%), Enakievo Steel (-4.4%), Azovstal (-3.8%), Ukrsotsbank (-3.7%), Motor Sich (-2.1%) and UkrAVTO (-5.1%) stocks.
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19.06.2008
At its pre-AGM meeting with investors, Gazprom management confirmed that the natural gas price for European customers will exceed $400/mcm in 2008, reflecting the recent boost in oil prices. That fueled speculations about similar price increases for FSU gas consumers, including Ukraine, which could see a more than 200% jump in the price of natural gas.
The uncertainty was enough to cause a resumed sell-off on the PFTS, with the biggest sales in the steel sector. Azovstal (-3.2%), Enakievo steel (-5.8%) and Alchevsk Steel (-4.4%) led the day in trading volumes. Among energy stocks, Zakhidenergo (-5.2%), Centrenergo (-4.3%) and Ukrnafta (-3.9%) were sold for liquidity reasons.
The lack of support for the market continued to stem from inflationary fears and growing political confrontation which could cause a delay in the ratification of vital economic documents such as the 2008 state budget and EURO-2012 related legislation.
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