Market comment

Обзоры рынка 18.03.2013 Ukrainian equities followed Europe’s lead in taking a breather as prices approached five-year highs and the markets braced for a Cyprus bail-out plan. The WIG-Ukraine Index in Warsaw dropped 0.4%, weighed down by a correction in the shares of food processor Agroton (AGT PW -6.2%), which had skyrocketed 19.7% in the prior session after reporting higher-than-expected earnings. Its shares are up 5.2% for the month. Coal Energy (CLE PW) fell 3.3% after reporting a monthly plunge in mining activity and has cost its investors 7.1% for the month. In London, JKX Oil & Gas (JKX LN) surged 9.0% and shares of mining firm Ferrexpo (FXPO LN) gained 3.5%, cutting its loss for the month to 9.5%. In Kyiv, the Ukrainian Exchange (UX) Index fell 1.1%, dragged down by electricity generator Donbasenergo (DOEN UK -3.9%) and steel producer Azovstal (AZST UK -3.8%). Unicredit’s Ukrsotsbank (USCB UK -2.9%) has plunged 10.8% in five straight losing sessions. We expect Ukrainian equities to take a strong hit today following the announcement of the Cyprus government that it would impose a 6.75 percent or 9.9 percent one-off levy on bank deposits. Most big Ukrainian businesses have deposits in Cyprus. The Ukrainian banking system’s liquidity remained resilent last week. Cash residuals at NBU correspondent accounts declined to only UAH 22 bln (from UAH 24 bln a week before). Interbank rates remained at their lows: 1% overnight, 2-3% weekly rates and 4-6% monthly rates. This allowed for a steady decline in local government bond yields by 0.5pp in a week to 11.0%. There were no surprises on the forex market – the UAH/USD rate remained nearly flat for the week within the narrow range of 8.12 – 8.13. The NBU wasn’t involved in direct interventions, which it usually does once the hryvnia crosses the 8.15/USD mark.