You're reading: Stock-market gloom lifts

Ukrainian shares lost a little ground from June 1 to June 8, but traders here are still cautiously optimistic about the market's future prospects.

'The market's on the up, the economy's stabilized and inflation is down,' said Oleksandr Vernygora of Kyiv-based Sokrat brokerage.

'The stabilization on the world markets has also had a positive effect on the domestic stock market,' he added.

The PFTS index of leading Ukrainian shares lost 2.4 percent over the trading period, closing at 20.98 on June 8. Volumes more than tripled over the previous period to Hr 12.7 million, versus Hr 3.8 million before.

Vernygora cited several other reasons why the market might rise in the future 'Nobody is selling big share packages now because prices are too low. There's a deficit on the market. If you sell now, you'll have to take a loss. Everybody's waiting for prices to rise, and actually there's a great potential for a rise.'

President Leonid Kuchma signed two decrees on June 4 designed to provide such a boost.

The first abolished the 20 percent value-added tax on securities deals conducted in the registered exchanges. The second eliminates a 15 percent tax on foreign investors' capital gains on the domestic stock market.

The decrees also cancel taxes on investments made jointly by local and foreign investment funds. Also, investors will not have to pay taxes on earnings raised from the flotation of bonds and certificates of deposit if these securities are sold for a price not higher than their nominal value.

The markets for corporate bonds and certificates of deposit are non-existent in Ukraine at the moment because of the high taxes on floating these securities.

On the debt market, Energoatom promissory notes are being resold at 19-20 percent of their nominal value. State Treasury promissory notes are selling at a 25-30 percent discount, and Ukrtelecom promissory notes have a 17-18 percent discount.

Trading on the Ukrainian Stock Exchange has slackened off yet again – only five deals were struck from June 1-8 on the Kyiv branch of the exchange, and the other regional USE branches registered no deals whatsoever. The trading volume for the period was just Hr 168,269.

In its continuing efforts to buoy the hryvna, the National Bank of Ukraine sold Hr 41 million worth of its certificates of deposit from May 31 to June 4. The CDs had maturities from four days to one month. Yields on CDs are steady at around 21 to 35 percent per annum.
Bonds

The Ministry of Finance managed to sell Hr 250 million worth of its OVDP treasury bills on June 1 and 2. The bonds had maturities of 406 days and yields of 29.5 percent per annum. Five days later, on June 7, the Finance Ministry sold Hr 50 million worth of 429-day bonds yielding 29.49 percent per annum.

Since the beginning of the year, the ministry has sold Hr 1.93 billion worth of OVDPs.

On the PFTS, OVDPs maturing in June, July and August saw active trading. In addition, Hr 749,925 worth of OVDPs were traded on the Ukrainian Interbank Currency Exchange on June 2. Yields on the bonds remain at 20-22 percent per annum.