Ukraine's stocks: what to wait for after presidential elections

Here are some quotes from Market Watch article on possible impact of elections on Ukraine's stocksi. The main idea of the article is that elections will bring political stability and that Tymoshenko's win will bring such a stability faster for she has to spend less time to consolidate power than Yanukovich, who'd have to fill the whole power structure of Ukraine with new personnel.

"We expect a difficult political battle during and after the election to trigger a new round of negative news flow," said Anastasia Golovach of Renaissance Capital in Kiev. "Investors could decide to sell some instruments [stocks and bonds] because the stabilization of the political situation in unlikely in the short term," she said.

Ukraine's benchmark PFTS stock index rose 90% in hryvna terms last year after tumbling 74% in 2008. In dollar terms, the index rallied 83% in 2009, just as much as it dropped the previous year. Still, over the last decade, the index has surged 858% in dollar terms and 1,366% in hryvna terms, according to data from the PFTS Stock Exchange.

"Liquidity is very poor here, but if we have a stable political situation and a stable exchange rate for a few months, investors will start looking at this country," Abromavicius said.

The market capitalization of the PFTS, which consists of 20 companies, was $10.1 billion last year. The sectors that stand out are steel and iron ore, utilities and banks.


Motor Sich, a manufacturer of aircraft engines, is one publicly traded company that investors should look at, observers say. Other potentially attractive firms include power generation company Centerenergo, Azovstal Iron and Steel Works, as well as Ukrtelecom, according to Dzierwa.

Investors can also get exposure through Ukrainian companies listed in London, such as Ferrexpo PLC (UK:FXPO 240.40, +9.25, +4.03%) , a Swiss-based producer of iron ore pellets with assets in Ukraine, poultry producer MHP S.A. and London-based JKX Oil & Gas PLC (UK:JKX 292.40, -5.10, -1.72%) , whose principal interests are located in Ukraine and Russia.

Sugar producer Astarta-Kyiv and sunflower-oil producer Kernel Holding SA are among Ukrainian stocks listed in Warsaw.

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Austria's Raiffeisen International (RAIFF 61.30, +0.65, +1.07%) , Hungary's OTP Bank, as well as France's BNP Paribas (FR:BNP 58.05, -0.59, -1.01%) and Credit Agricole SA (FR:ACA 12.97, +0.07, +0.50%) all have a local presence. Russian banks, such as state-owned Sberbank and private lender Alfa Bank, are also represented.

Global steel producer ArcelorMittal (MT 46.58, -1.28, -2.67%) bought a major steel mill in 2005, while a Russian group is reportedly close to acquiring control of Industrial Union of Donbass, one of Ukraine's biggest steel companies.

"Ukraine is always promising," said Abromavicius of East Capital. "Let's hope that one day, sooner rather than later, it will live up to this potential."