Market comment

Обзоры рынка 08.04.2013 Ukrainian equities concluded a losing week by dipping further in the red at the Friday, April 5 trading session. Stocks traded in Warsaw proved resilient to the effect of the Uglegorsk power plant fire as the WIG Ukraine Index in Warsaw fell 0.4% on Friday, concluding the week at a 0.1% drop. Coal Energy (CLE PW -6.1%) plunged 11.7% in four straight losing sessions. Shares of coal miner Sadovaya (SGR PW -4.4%) were down 8.5% for the week. Kulczyk Oil (KOV PW -0.8%) has declined 4.5% in three straight decreasing sessions. In London, shares of poultry producer MHP (MHPC LI -5.6%) have lost 8.5% in four straight losing sessions. Shares of mining firm Ferrexpo (FXPO LN -4.5%) plunged 10.2% last week. Other top decliners of the day were Regal Petroleum (RPT LN -4.2%) and JKX Oil & Gas (JKX LN -2.9%), which fell 4.2% in three straight dropping sessions. In Kyiv, the Ukrainian Exchange (UX) Index slid 1.6%, finishing the week at a 9.9% loss. Shares of oil producer Ukrnafta (UNAF UK -3.5%) continued their freefall, plummeting 28.9% in 15 straight losing sessions amidst two-and-a-half months of speculation. Year-to-date, the stock price has fallen only 3.9%. Shares of Uglegorsk’s owner Centerenergo (CEEN UK 3.3%) crashed 28.0% last week, falling to their lowest price in more than four years. On the local money markets, some decline in liquidity was observed last week as NBU correspondent accounts fell to UAH 22-23 bln from UAH 24 mln a week before. Short-term interbank facilities became up to 2 pp more expensive during the week, which traders attribute to Naftogaz of Ukraine discharging money from its bank accounts to pay its March bill to Gazprom. Overnight rates increased from 1-2% to 3-5%, while rates for monthly lending remained flat at 4-6%. Against this background, a 25-30 bp increase in local bond yields was observed on the secondary market to 11.0% / 10.25% for one-year notes and 11.8% / 11.4% for VAT notes. On the primary market, however, MinFin set a new low cutoff level for nine-month notes at 8.75% (vs. 9.0% at the previous auction). Only minimum volatility was observed on the ForEx market, with the hryvnia being traded in a range of 8.14 – 8.16 per U.S. dollar, and ending the week stronger at 8.137/8.141.