State Statistics Committee publishes the info on retail trade and restaurant business turnover in 2009. It appears that the number is down 20% in 2009 compared to 2008. In 2009 turnover in the retail sector was UAH 229.9 bn, which is about $28.5 bn at the current exchange rate. It is likely that the downfall in retail turnover is not over yet and is to continue in 2010.
The city of Kyiv is down 22%. Donetsk oblast is the leader in retail contraction - 26%, while Kyiv oblast (excluding Kyiv) turned out to be the most resilient to contraction - only 9.8% down.
Source
Saturday, January 16, 2010
Friday, January 15, 2010
Sell-side firm forecasts grivna exchange rate for 2010
Dragon Capital, one of the largest Ukrainian investment companies, forecasts foreign exchange rate to be 7.5 grivna for 1 USD at the end of 2010. UR sees this prediction as too optimistic, considering recent sudden and sharp fluctuation of Ukrainian currency rate after the end of New Year vacations. Since 7th of December, grivna has lost almost 2.5% of its value against dollar during 4 days, reaching its September’09 levels – 8.20. Only due to intensive market interventions by National Bank of Ukraine, hryvna/USD rate is now 8.07.
These fluctuations are the reason for doubts regarding the peaceful future of grivna in 2010. According to Dragon’s forecast, the revalutaion will be supported by inflow of capital (strange assumption, considering worsening of financial condition of Ukrainian leading corporations) and economic growth (almost eqal to zero).
What was left out in Dragon Capital's assumptions is growth of public debt, worsening of quality of credit portfolios of Ukrainian banks, and predicted defaults of construction companies. All these factors, as well as possibility of sovereign defaults of emerging countries can cause zero capital inflow in Ukraine in 2010.
Regarding IMF loans, it is possible to predict that Fund will provide limited loans sufficient only for preserving national currency from sharp devaluation. Restriction of cooperation with the IMF in 2010 will be caused by overwhelming populism of Ukrainian government with its desire to control NBU and currency reserves.
To summarize, Dragon capital’s opinion represents the desired scenario for a sell-side company. Nevertheless, it seems to us in UR that the map of risks for Ukraine is a bit different.
These fluctuations are the reason for doubts regarding the peaceful future of grivna in 2010. According to Dragon’s forecast, the revalutaion will be supported by inflow of capital (strange assumption, considering worsening of financial condition of Ukrainian leading corporations) and economic growth (almost eqal to zero).
What was left out in Dragon Capital's assumptions is growth of public debt, worsening of quality of credit portfolios of Ukrainian banks, and predicted defaults of construction companies. All these factors, as well as possibility of sovereign defaults of emerging countries can cause zero capital inflow in Ukraine in 2010.
Regarding IMF loans, it is possible to predict that Fund will provide limited loans sufficient only for preserving national currency from sharp devaluation. Restriction of cooperation with the IMF in 2010 will be caused by overwhelming populism of Ukrainian government with its desire to control NBU and currency reserves.
To summarize, Dragon capital’s opinion represents the desired scenario for a sell-side company. Nevertheless, it seems to us in UR that the map of risks for Ukraine is a bit different.
Thursday, January 14, 2010
Deficit of Ukraine's foreign trade in goods over eleven months shrinks by 3.7 times
The deficit of Ukraine's foreign trade in goods January through November 2009 was estimated at $4.815 billion, which was 3.7 times down on the same period in 2008 ('minus' $17.857 billion), the State Statistics Committee reported.
The export of goods in the eleven months was estimated to be worth $35.603 billion (56.6% of the January-November 2008 period), and imports amounted to $40.418 billion (50.1%).
As the State Statistics Committee said, the deficit of Ukraine's foreign trade in goods was due to trade in certain groups of commodities – energy materials, oil and fuel ('minus' $11.2 billion), pharmaceuticals ('minus' $1.743 billion), and polymers and plastic materials ('minus' $1.583 billion).
The ratio of coverage of imports by exports January through November 2009 was 0.88, whereas in the same period last year it was 0.78. Source.
The export of goods in the eleven months was estimated to be worth $35.603 billion (56.6% of the January-November 2008 period), and imports amounted to $40.418 billion (50.1%).
As the State Statistics Committee said, the deficit of Ukraine's foreign trade in goods was due to trade in certain groups of commodities – energy materials, oil and fuel ('minus' $11.2 billion), pharmaceuticals ('minus' $1.743 billion), and polymers and plastic materials ('minus' $1.583 billion).
The ratio of coverage of imports by exports January through November 2009 was 0.88, whereas in the same period last year it was 0.78. Source.
Wednesday, January 13, 2010
50% plus two stock of ISD sold to consortium of investors
Alexander Katunin, the owner of Swiss metal trader Carbofer Group and the former co-owner of Russia's Evraz Group, together with a group of financial investors and with the participation of Russia's Vnesheconombank (VEB), has purchased a controlling interest in Donetsk-based Industrial Union of Donbas (IUD) Corporation. The new partners have helped the company to strengthen its position on the global market, the IUD said in a press release.
Alexander Katunin (who was a co-founder and a shareholder of Evraz Group until 2004), an owner of the international steel and iron products trader Carbofer Group S.A. as well as logistic and production companies, have bought a 50% plus two stocks package in the IUD. A 49.99% share still belongs to Serhiy Taruta and Oleh Mkrtchan," the press release reads.
The IUD, founded in 1995, is an integrated holding company that owns or manages stakes in mining and metals enterprises. The group's core assets are the Alchevsk Iron & Steel Works (AMK), Alchevsk Coke-Chemical Plant and Dzerzhynsk Iron & Steel Works (DMK) in Ukraine, as well as Dunaferr in Hungary, and ISD-Huta Czestochowa in Poland. Source.
Alexander Katunin (who was a co-founder and a shareholder of Evraz Group until 2004), an owner of the international steel and iron products trader Carbofer Group S.A. as well as logistic and production companies, have bought a 50% plus two stocks package in the IUD. A 49.99% share still belongs to Serhiy Taruta and Oleh Mkrtchan," the press release reads.
The IUD, founded in 1995, is an integrated holding company that owns or manages stakes in mining and metals enterprises. The group's core assets are the Alchevsk Iron & Steel Works (AMK), Alchevsk Coke-Chemical Plant and Dzerzhynsk Iron & Steel Works (DMK) in Ukraine, as well as Dunaferr in Hungary, and ISD-Huta Czestochowa in Poland. Source.
Monday, January 11, 2010
Naftogaz to have $4 bn deficit in 2010?
According to prediential representative on energy security Mr. Sokolovsky Naftogaz should have about $4 bn deficit in 2010. In a simple addition substraction game he told that in 2010 Naftogaz should pay Russia about $10 bn for gas, while Ukrainian market is forecasted to generate in payments about $5 bn. Where will the other $5 bn come? Mr. Sokolovsky thinks that there will be a contraction in gas demand for about $1 bn. In the end we have 10-5-1=4, which is $4 bn that Naftogaz will miss. Source.
Sunday, January 10, 2010
FDI into Ukraine drops almost trifold in 2009
Ukraine has been hard hit by the credit crunch and the crisis. As a result of that FDI into Ukraine drops almost trifold in first 9 months of 2009. From $8 bn in the first 9 months of 2008 to $2.97 bn in the same period of 2009. It is the city of Kyiv that got most of the FDI flow, receiving $1.2 bn. Other top performers include Kharkiv, Lugansk, Lviv and Kyiv oblast. Disinvestment was occured in Chernigiv and Poltave oblasts.
During the times of independence Ukraine got $837.5 of FDI per capita, provided the population shrinks that number has a built-in improvement trend... Source.
Wednesday, January 6, 2010
Cabinet of Ministers pumps up control over prices in pharmaceutical industry
During the meeting with reps of pharmaceutical business in Ukraine Yulia Tymoshenko, prime minister of Ukraine, ordered to create a coordination commission to check the fairness of price-setting in pharmaceutical industry. As of now no concept of price-setting apart from vague remarks of the prime minister has been suggested. However, prime minister told that if the price-setting is found unfair the licenses of drug stores will be revoked for good.
The commission will consist of reps of the Tax administration, Anti-monopoly committee, State inspection on price cotrol, and Association of producers of medical products. Source.
The price-setting mechanism for medical products in Ukraine is a question of corruption for a long time, esp. when the government agencies buy drugs at artificially inflated prices. However, back then no questions to price-setting mechanism were asked. Prior to presidential campaign the government played the card of "flu epidemics threatening the nation" and drug-stores became the culprits of deficit and speculation with flu prevention drugs. Following the scandals with drug-stores getting filthy rich speculating on first aid drugs the government continues to develop the story increasing its intervention in and discretionary power over the pharmaceutical business in Ukraine.
The commission will consist of reps of the Tax administration, Anti-monopoly committee, State inspection on price cotrol, and Association of producers of medical products. Source.
The price-setting mechanism for medical products in Ukraine is a question of corruption for a long time, esp. when the government agencies buy drugs at artificially inflated prices. However, back then no questions to price-setting mechanism were asked. Prior to presidential campaign the government played the card of "flu epidemics threatening the nation" and drug-stores became the culprits of deficit and speculation with flu prevention drugs. Following the scandals with drug-stores getting filthy rich speculating on first aid drugs the government continues to develop the story increasing its intervention in and discretionary power over the pharmaceutical business in Ukraine.
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