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Tuesday, August 31, 2010

Daily Market Brief

Market Comment

Ukrainian equity markets showed mixed dynamics Monday (Aug. 30). The UX exchange opened strong, but failed to keep gains and closed only 0.07% higher. Total trading volume was moderate at UAH 73 mln. An impressive gain for Avdiivka Coke (AVDK +4.02%) was offset by a weak performance by Yasynivka Coke (YASK -4.18%). Steel producers posted mild losses: ALMK -0.35%, AZST -0.74%, ENMZ -1.10%. Centerenergo (CEEN -0.67%) and Ukrtelecom (UTLM -0.38%) came under selling pressure, while Motor Sich (MSICH +0.31%), Ukrnafta (UNAF +1.36%) and Ukrsotsbank (USCB +0.72%) enjoyed modest demand.

The London Stock Exchange was closed yesterday due to a banking holiday. Ukrainian food processing stocks listed in Warsaw advanced. Astarta (AST PW) soared 2.14% and Kernel (KER PW) inched up 0.41%.

Politics: Amendments to Ukrainian law pave the way for local elections
Fixed Income: Ministry of Finance places third tranche of VAT bonds
Metals and Mining: Alchevsk repays one-third of its debt for raw materials to Metinvest
Food processing: Kernel reports $152.7 mln net profit

Friday, August 27, 2010

Daily Market Brief

Market Comment

Ukrainian equity markets reversed to gains Thursday (Aug. 26), pulled up by positive news from global markets. The UX exchange traded in the black throughout the session, adding 0.97% on a moderate trading volume of UAH 78 mln. Blue chips were on a roll led by Motor Sich (MSICH +2.43). Metals and mining stocks kept the pace (ALMK +1.42%, AVDK +1.45%, AZST +0.92%, ENMZ +1.24%, YASK +2.34%). Banks gained ground with Raiffeisen Bank Aval (BAVL) adding 1.02% and Ukrsotsbank (USCB) rising 1.5%. Centerenergo (CEEN +0.84%), Ukrnafta (UNAF +0.79%) and Ukrtelecom (UTLM +1.08%) also got a lift from the market’s broad advance, while Zakhidenergo (ZAEN -0.08%) was the only blue chip to close in the red.

Ukrainian stocks listed on international exchanges closed mixed. Astarta (AST PW +3.54%) was the stock of the day as sound financials attracted investors. Kernel (KER PW +2.44%), Cadogan (CAD LN +1.52%) and JKX Oil & Gas (JKX LN +0.97%) were also in demand, while Regal (RPT LN -3.03%) came under selling pressure and Ferrexpo (FXPO LN -0.07%) dipped slightly.

Moderate action was observed on the Ukrainian Eurobond space Thursday. Sovereigns and NAFTO traded marginally stronger. The corporate sector saw two-way flows with better bidding for MHPSA and PRBANK. Bidders also prevailed for municipal issues and ALFAUA, which closed without any price change on the day.

The Russian market traded generally flat during the session. The Belorussian sovereign was under selling pressure, trading more than 1 p.p. lower.

Oil & Gas: Cadogan reports 1H2010 results
Oil & Gas: Ukrnafta shuffles state representatives on supervisory board

Thursday, August 26, 2010

Daily Market Brief

Market Comment

Ukrainian equity markets retreated Wednesday (Aug. 25) as disappointing reports out of the U.S. raised worries of another global economic slowdown. The UX exchange slumped 3.15% on a solid trading volume of UAH 96 mln. Centerenergo (CEEN -4.38%) and Ukrtelecom (UTLM -4.37%) took the hardest hits. Steel names were also slammed: ALMK -4.13%, AZST -3.60%, ENMZ -3.44%. Coke producers (AVDK -1.87%, YASK -1.86%) and banks (BAVL -2.54%, USCB -3.16%) waded into the red followed by Motor Sich (MSICH -2.09%), Ukrnafta (UNAF -1.92%) and Zakhidenergo (ZAEN -3.06%).

Ukrainian stocks listed on international markets traded in the doldrums yesterday. Regal Petroleum (RPT LN) was the only exception, edging up 0.76%. Other oil and gas names posted moderate losses: JKX LN -2.04%, CAD LN -1.49%. Food processing stocks weakened (AST PW -2%, KER PW -1.05%, MHPC LI -1.29%), while Ferrexpo turned in the worst performance, dropping 4.07%.

Sellers dominated on the Ukrainian Eurobond market Wednesday. Sovereigns lost another half a point during the session. Naftogaz was down about 1.25 p.p., but managed to recover some losses by the close. The corporate sector was less active with some trading recorded for ALFAUA and MHP, both closed weaker.

The Russian market underperformed as well, and BELARUS closed about 1 p.p. lower.

Fixed Income: Avangard to tap Eurobond market
Food processing: Avangard boosts net profit 86% Y-o-Y
Agriculture: Astarta releases 1H2010 financials

Wednesday, August 25, 2010

Weekly Ukraine Fixed Income Note

Fixed Income Weekly
Moderate activity was observed on the Ukrainian Eurobond market over the past week. Investors were hesitant to increase their positions in sovereigns. Negative global market sentiments fueled by downbeat US economic data pushed Ukraine’s government Eurobonds down 1.4 p.p. on the long-end. Among corporate issues, MHP 15 enjoyed good demand on solid 1H2010 financial results. The company increased net income 14%   Y-o-Y to $102 mln and seized half of Ukraine’s poultry market in the process. The increase in grain prices will not have a significant impact on MHP’s financials since the company utilizes corn predominantly in poultry production. In the banking Eurobond segment, Privatbank posted gains during the past week on impressive financial results in 1H2010.
The Ukrainian Eurobond market is currently driven by global sentiment towards EM debt. The spike in demand was driven by record-low interest rates in developed countries and suppressed fears over Europe’s sovereign debt crisis. As a result, yields on Ukrainian sovereign issues bottomed out below the pre-crisis level. Among the events expected to spur action on the domestic market this week, the Ukrainian government has promised to place the second tranche of VAT bonds with a total amount exceeding UAH 10 bln. However, given previous delays we do not rule out the possibility of a postponement of the second tranche until September.
Sovereign issues still look overvalued given current fundamentals. NAFTO appears overpriced taking into account the recent decision by a Kiev court obliging Naftogaz to return 12.1 bln m3 of natural gas to RosUkrEnergo – the total cost is estimated around $2.8 bln. We issue a SELL recommendation on Naftogaz given that NAFTO yields below UKRAIN 16. Among CIS sovereigns, the debut Belarusian Eurobond is an attractive investment opportunity with YTM of 8.36% and priced at 101.55%. Belarus has comparable fundamentals to Ukraine; however, BELRUS trades with a 175 bps premium to UKRAIN, which we view as too wide. Additionally, we see value in second-tier banking names. In our view, ALFAUA and FIUKR will gain on the heels of the strengthening of Ukraine’s banking industry. FIUKR, however, is more suitable for risk-prone investors.

Daily Market Brief

Market Comment

Ukrainian equity markets were closed yesterday (Aug. 24) as the country celebrated Independence Day.

Ukrainian stocks on international exchanges slumped, as negative sentiment pushed prices down. Ferrexpo (FXPO LN -4.45%) and Astarta (AST PW -4.43%) were the most prominent losers. Among food processing stocks, Kernel (KER PW) dropped 1.66% and MHP (MHPC LI) closed unchanged. Oil and gas names followed the negative trend: Regal (RPT LN) lost 2.96%, JKX Oil& Gas (JKX LN) slid 1.04% and Cadogan (CAD LN) hugged the flat line.
Moderate action was observed on Ukraine’s Eurobond space Tuesday. Following global negative sentiment sovereigns closed about 1 p.p. lower on the long end. Naftogaz continued to be very well bid and closed just a quarter weaker. In the corporate sector, MHP outperformed, while long-end CITKIE were under selling pressure.

Politics: Ukraine’s President is hungry for more power
Politics: Yanukovych calls for extraordinary session of Ukraine’s Parliament
Macro: FX supply outweighs demand in August

Tuesday, August 24, 2010

Ukraine Agriculture Brief

Ukraine’s harvest: What to expect in 2010
Harsh weather conditions have put the prospects for Ukraine’s harvest under pressure. The forecast for grain harvest has been downgraded to 40-42 MT compared to 46 MT in 2009. As a result, Ukraine’s government may consider imposing a quota on grain export. Under this policy, world prices for wheat would be pushed upwards from the current price of $5.9 per bushel. Ukraine’s domestic prices for grain, in this case, would be contained below UAH 1000 ($126.6) per tonne, which is well above the 2009 level of UAH 800 ($102.7) per tonne. Large Ukrainian agriculture companies are not expected to experience a significant negative impact from the imposition of export quotas. Domestic prices, nevertheless, are forecasted to be higher compared to 2009. Moreover, the expected 10.9% drop in grain harvest will mainly affect small land farmers concentrated on grain production.

Thursday, August 19, 2010

Daily Market Brief

Market Comment

The downward trend that prevailed on international exchanges Wednesday (Aug 18) didn’t affect Ukrainian equity markets, which continued to move upwards. The UX exchange erased a stumble in the morning to add 0.47% by the closing bell. Trading volume totaled nearly UAH 72 mln. Metals and mining names ended modestly higher: ALMK +0.33%, AVDK +0.28%, AZST +0.74%, ENMZ +1.05%, YASK +1.69%. Prices for GenCos moved slightly up with Centerenergo (CEEN) adding +0.49% and Zakhidenergo climbing 0.42%. All other blue chips advanced (MSICH +0.78%, UNAF +0.70%, USCB +0.42%, UTLM +0.73%) excluding Raiffeisen Bank Aval (BAVL) that lost 0.06%.

On international markets, Ukrainian food processing stocks moved mostly higher: MHPC LI +0.07%, AST PW +0.71%, KER PW unch. Sentiment changed for oil and gas names as Cadogan pared some of the previous day’s losses to close up 3.08%, while JKX Oil & Gas (JKX LN -0.28%) and Regal (RPT LN) came under selling pressure. Ferrexpo (FXPO LN) extended gains by adding 1.67%.

The Ukrainian Eurobond market saw a rise in activity Wednesday. Two-way flows were recorded for sovereigns, which closed virtually unchanged on solid trading volumes. Naftogaz surprisingly outperformed the rest of the market, adding more than a point. In the corporate sector, EXIMUK 15 opened stronger, but faded during the session to close flat. PRBANK traded lower, while DTEK and MHPSA closed unchanged.

Russian sovereigns continued to chart an upward trend, closing 0.5 p.p. higher on the long end. In the corporate sector, action was generally balanced with light profit taking observed at the end of the day.

Wednesday, August 18, 2010

Daily Market Brief

Market Comment

Upbeat industrial output data and strong corporate reports out of the US boosted Ukrainian equity markets Tuesday (Aug. 17). The UX exchange advanced 1.72% on a solid trading volume of UAH 98 mln. Yasynivka Coke (YASK) stole the spotlight, jumping 6.85%. Other metals and mining stocks outperformed the market: ALMK +2.39%, AVDK +2.30%, AZST +4.49%, ENMZ +2.70%. Banks (BAVL +1.27%, USCB +2.62%) and GenCos (CEEN +1.17%, ZAEN +1.15%) benefited from the broad upward shift. Motor Sich (MSICH +0.76%) and Ukrnafta (UNAF +2.15%) gained ground, unlike Ukrtelecom that bucked the general trend to close 0.31% lower.

Ukrainian stocks listed on international markets closed mixed. Cadogan (CAD LN -4.41%) plunged into the red. Other oil and gas stocks closed higher: JKX LN +0.73, RPT LN +2.24%. Ferrexpo (FXPO LN) soared 4%. As for food processing names, Astarta (AST PW +0.08%) and Kernel (KER PW +0.32%) eked out gains, and MHP (MHPC LI -0.36%) slid.

Moderate activity was recorded Tuesday on the Ukrainian Eurobond market. Sovereigns showed steady volatility and were the most actively traded bonds on the day. Long-end issues climbed almost 1 p.p. to close virtually unchanged. NAFTO was well bid, adding about a half point. In the corporate sector, ALFAUA and DTEK were in demand and closed around 0.5 p.p. stronger.

Russian sovereign issues performed well, adding about a half point during the session. In the corporate segment, RURAIL and TNK closed higher on solid bidding, while VTB, GAZPRU and EVRAZ traded flat.

The Belorussian issue closed slightly stronger on good demand, adding about 0.25 p.p.

Fixed Income: UkrSibbank to increase share capital by 42%
Fixed Income: Interpipe to consider capital increase

Tuesday, August 17, 2010

Daily Market Brief

Market Comment

Strong volatility was observed on Ukrainian markets Monday (Aug 16). The UX exchange seesawed throughout the day and closed up 0.06% on a late-session surge. Total equity trading volume was thin at UAH 57 mln. Metals and mining stocks struggled into the black: ALMK +1.69%, AVDK +0.85%, AZST +0.32%, ENMZ +0.25%, YASK +0.06%. Guarded trading for GenCos (CEEN +0.28%, ZAEN +0.09%) pushed stocks slightly higher. Raiffeisen Bank Aval (BAVL +0.20%) gained a fraction, while Ukrsotsbank (USCB) dropped 0.44%. Motor Sich (MSICH) and Ukrtelecom (UTLM) came under selling pressure, losing 0.79% and 0.49% respectively. Ukrnafta (UNAF +0.44%) was the session’s volume leader with UAH 9.7 mln in trades.

Ukrainian stocks listed on international markets closed mixed. Astarta (AST PW) dropped 0.78%, Ferrexpo (FXPO LN) slid 0.59% and JKX Oil & Gas (JKX LN) shed 0.41%. Cadogan (CAD LN) and MHP (MHPC LI) finished flat. Kernel (KER PW +1.61%) was the only stock to advance.

The Ukrainian Eurobond market started the week off slow. Sovereigns and NAFTO closed unchanged. EXIMUK traded down during the session, closing 0.375 p.p. lower. Among corporate names, some action was recorded for MHPSA, which closed stronger by about a half a point.

The Russian market also recorded low activity Monday. Sovereign issues closed flat. In the corporate sector, EVRAZ, GAZPRU and VEB closed flat on limited action.

Pricing for the Belorussian sovereign issue went unchanged throughout the day.

Macro: Ukraine’s GDP grows 6% Y-o-Y
Agriculture: Landkom expects $2.8 mln in gross profit from rapeseed

Monday, August 16, 2010

Daily Market Brief

Market Comment

Ukrainian equity markets closed in the black Friday (Aug 13). The UX exchange jumped more than 25 points from the opening, pushed up by positive sentiment emanating from global markets. The exchange lost momentum by mid-session, however, and finished only 0.56% higher. Total trading volume was moderate at UAH 65 mln. Stocks closed broadly higher with Azovstal (AZST +3.07%) leading the way up. Most metals and mining stocks outperformed the market: ALMK +1.72%, AVDK +0.96%, ENMZ +1.02%, YASK +0.39%. Banks (BAVL +1.92%, USCB -0.13%) and GenCos (CEEN +0.44%, ZAEN -0.09%) showed mixed dynamics, while other blue chips including Motor Sich (MSICH +1.58%), Ukrnafta (UNAF +0.36%) and Ukrtelecom (UTLM +0.08%) followed the positive trend.

Among Ukrainian stocks listed on international exchanges, oil and gas names posted solid gains: Cadogan (CAD LN) edged up 1.49%, JKX Oil & Gas (JKX LN) added 1.75% and Regal (RPT LN) grew 3.82%. Ferrexpo (FXPO LN) dropped 0.28%. Warsaw-listed stocks closed mixed with Astarta (AST PW) rising 3.06% and Kernel (KER PW) sliding 2.52%.

Activity on the Ukrainian Eurobond market was expectedly sluggish Friday. However, Sovereigns bucked the trend, falling significantly on a flurry of trading recorded in the first half of the session. Quasi-sovereigns also lost a half a point on the day. UKRSIB was the only bond in the Ukrainian universe to add in price.

Macro: Ukraine’s government releases economic forecasts
Fixed Income: Government to increase capital of Naftogaz Ukrainy
Metals and Mining: ALMK to double production in August

Friday, August 13, 2010

Daily Market Brief

Market Comment

Seesaw action was observed on Ukrainian equity markets Thursday (Aug. 12). Weighed down by negative data out of the US, the UX exchange dipped more than 20 points, but pared losses in a late rally to end the session 0.07% higher. Activity was moderate with a total trading volume of UAH 86 mln. MMKI stole the spotlight, jumping 20.12% on low volumes. Alchevsk Steel (ALMK +0.58%) and Yasynivka Coke (YASK +0.27%) gained ground, while other metals and mining stocks floundered in the red (AVDK -0.24%, AZST -0.76%, ENMZ -1.23%). Ukrtelecom (UTLM) was among notable gainers, adding 2.09%. Ukrnafta (UNAF) and Zakhidenergo (ZAEN) inched up 0.06% and 0.26% respectively, while Centerenergo (CEEN) dropped 0.79%.

Most Ukrainian stocks listed on international markets returned to positive territory. All food processing names finished higher: KER PW +2.25%, AST PW +0.16%, MHPC LI +1.81%. Ferrexpo (FXPO LN) advanced 2.73%. The situation in the oil and gas sector was less optimistic. JKX Oil & Gas came under selling pressure to close 1.72% lower, while Cadogan (CAD LN) and Regal (RPT LN) hovered around the flat line.

Moderate action was recorded on the Ukrainian Eurobond market Thursday. Solid demand at the opening pushed long-end sovereigns and NAFTO up about a half a point; however, interest faded quickly causing the papers slip back to previous levels. In the corporate sector, volumes were insignificant with some trading in Metinvest and MHPSA. Slight demand was observed for municipal issues and AZOVTL without any price change on the day.

Trading on the Russian market was similarly moderate with sovereigns closing flat. In the corporate sector, GAZPRU, VTB and VEB were actively traded without any price change recorded.

Thursday, August 12, 2010

Daily Market Brief

Market Comment

Ukrainian stock markets sunk deep into the red Wednesday (Aug. 11) as negative data out of China and the US shook investors’ faith in economic recovery. The UX exchange (-3.26%) opened sharply lower, driven down by steel producers (ALMK -5.05%, AZST -5.29%, ENMZ -5.71%). Coke names (AVDK -3.20%, YASK -4.91%) posted steep losses with banks (BAVL -4.03%, USCB -3.21%) and GenCos (CEEN -3.82%, ZAEN -0.72%) following suit. Nearly all blue chips suffered heavy blows including Motor Sich (MSICH -3.35%), Ukrnafta (UNAF -2.70%) and Ukrtelecom (UTLM -1.53%).

Ukrainian stocks listed on international markets also came under selling pressure. Ferrexpo (FXPO LN) was among the worst performers – the stock lost 5.8%. Oil and gas names closed slightly lower (CAD LN -1.47%, RPT LN -2.96%, JKX LN unch.). Food processing stocks were not immune to the general decline: MHPC LI -2.13%, AST PW -0.16%, KER PW -0.64%.

Sellers were out in force on the Ukrainian Eurobond market Wednesday. Sovereigns traded 0.25 to 0.75 p.p. lower. Naftogaz felt the heat, losing a point during the session. Metinvest and MHPSA were also among the worst performers, closing 0.5 to 1 p.p. down.

On the Russian space, sellers dominated with Russia 30 closing half a point lower. In the corporate sector, trading volumes were moderate with weaker pricing throughout the day. The Belorussian sovereign issue closed down on Wednesday, losing half a point.

Oil & Gas: Ukrnafta reports revised net profit for 1H2010

Wednesday, August 11, 2010

Daily Market Brief

Market Comment

Ukrainian exchanges were sent reeling Tuesday (Aug. 10) by negative performances on global markets. The UX exchange slumped 2.15% on a solid trading volume of UAH 89.5 mln. The broad market traded in the red from the opening bell, with metals and mining names (ALMK -4.66%, AVDK -2.17%, AZST -2.55%, ENMZ -3.27%, YASK -4.18%) leading the way down. Banks (BAVL -2.49%, USCB -3.20%) and GenCos (CEEN -3.51%, ZAEN -1.01%) lost ground. Investors were bearish on other blue chips as well: MSICH -1.29%, UNAF -1.97%, UTLM -1.49%.

Almost all Ukrainian stocks listed on international markets traded in the doldrums – only Cadogan (CAD LN) managed to remain in positive territory, adding 1.49%. JKX Oil & Gas (JKX LN) dropped 0.51%, Regal Petroleum (RPT LN) lost 2.17%. Food processing stocks kept pace with the decline: Astarta (AST PW) fell 1.74%, Kernel (KER PW) closed down 0.95%, and MHP (MHP LI) shed 0.21%. Investors chose to secure profits on Ferrexpo (FXPO LN -2.43%), which had been on a roll in previous sessions.

Trades were far and few between on the Ukrainian Eurobond market Tuesday. Some profit taking was observed for long-end sovereigns and NAFTO, which closed about 0.5 p.p. lower. Municipal issues traded flat, while METINV and DTEK recorded slight losses.

The Russian Eurobond market traded in the red. The sovereign benchmark closed at the 118 level. In the corporate sector, generally negative sentiment drove GAZPRU, VTB and SBER lower.

GenCos: Electricity consumption in Ukraine up 11%

Tuesday, August 10, 2010

Daily Market Brief

Market Comment

Ukrainian equity markets started the week off in a positive mood. The UX exchange jumped 0.95% Monday (Aug. 9) on a moderate trading volume of UAH 65.5 mln. Metals and mining names (AVDK +1.52%, AZST +1.25%, ENMZ +2.24%, YASK +2.73%) led a broad-based advance, which saw Poltava GOK skyrocket 20.57%. Alchevsk steel (ALMK -0.62%) was among the few names to pick up losses on the day. Banks followed the positive trend with Raiffeisen Bank Aval (BAVL) up 0.69%, and Ukrsotsbank (USCB) adding 1.22%. Uknafta (UNAF +1.35%) and Motor Sich (MSICH +1.35%) also reversed to gains, while GenCos (CEEN +1.94%, ZAEN -1.62%) closed mixed.

Ukrainian stocks traded on international markets showed mixed dynamics. Regal (RPT LN) pared the day’s previous losses to close 3.76% higher. JKX Oil & Gas climbed 0.76%, while Cadogan slipped 1.47%. Among food processing stocks, Astarta (AST PW +1.94%) and MHP (MHPC LI +0.215) inched up, unlike Kernel that dropped 0.7%. Ferrexpo (FXPO LN) remained on a roll, extending gains by 0.75%.

Demand was steady for Ukrainian risk on Monday. Sovereigns traded stronger by a half a point on the long end, while short-end issues edged up one eighth of a point. Municipal issues were also well bid; however, trading volumes remained insignificant. In the corporate sector, METINV, DTEK and MHPSA outperformed the universe to close 0.5 to 1 p.p. higher. Banking names generally closed unchanged with buyers recorded only for ALFAUA.

The rally continued on the Russian market. Russia 30 managed to add another half a point. Corporates also traded higher on solid demand.

Macro: The National Bank of Ukraine slashes discount rate
Metallurgy: Ukrainian steel plants decrease losses in June

Monday, August 9, 2010

Daily Market Brief

Ukrainian markets slid for a third straight session Friday (Aug. 6), in line with the downward trend seen on global markets. The UX exchange lost 0.88% on a moderate volume of UAH 74 mln. Stocks declined across the board with banks (USCB -1.38%, BAVL -1.26%, FORM – 0.96%) and utilities (ZAEN -1.25%, UTLM -1.22%) setting the pace. With the exception of Yasynivsky Coke (YASK +0.06%), metals and mining stocks listed in the index basket retreated (ALMK -1.23%, AVDK -0.88%, AZST -0.91, ENMZ -2.59%). Stirol (STIR +4.17%) and Ukrnafta (UNAF -0.92) led all stocks in trading volume at UAH 10.6 mln and UAH 9.7 mln respectively.

Ukrainian stocks listed on international markets closed mixed Friday. Regal (RPT LN) was among the worst performers, losing 2.21%. JKX Oil & Gas also declined (JKX LN -0.55%), while Cadogan (CAD LN) finished unchanged. Among food processing stocks, Kernel (KER PW) edged up 2.33%, Astarta (AST PW) dropped 0.48% and MHP (MHPC LI) closed flat. Ferrexpo (FXPO LN) advanced 2.33% on the back of impressive financials posted for 1H2010.

Trading activity was slow on the Ukrainian Eurobond market Friday, with just slight demand recorded at the end of the session. Sovereigns closed half a point stronger on the long end on low volumes. In the corporate
sector, Metinvest and DTEK finished marginally up, while MHPSA slid.

The Russian sovereign benchmark skyrocketed at the end of the trading day to close 1 p.p. higher. In the banking sector, VEB, SBER and VTB all finished stronger. Among other corporate names, Lukoil, VIP and RAIL added in price on solid demand.